Mousetrap 11/20/2011

[Timothy Clontz]

Secular Hold IAU & XLF 3.46%
Condition Bear Market Rally
S&P Target 940
Hedge XLU -1.33%

Position Date Return Days Call
SE 6/27/2011 8.92% 145 Hold
CLH 7/6/2011 7.10% 136 Hold
GCI 7/14/2011 -19.25% 128 Hold
GTAT 9/8/2011 -34.94% 72 Hold
CSGS 10/3/2011 17.74% 47 Hold
NLY 10/25/2011 -1.52% 25 Hold
DD 10/27/2011 -4.03% 23 Hold
AMGN 10/27/2011 -4.09% 23 Hold
KBR 10/27/2011 -5.28% 23 Hold
VG 10/27/2011 -22.38% 23 Hold

S&P Annualized -20.45%
Mousetrap Annualized -1.69%
Hedged Annualized -4.52%
Secular Annualized 7.35%

The market is a perilous place, and even the large gains I made in the earlier closed positions are getting negated by large drawdowns in the current ones. GTAT is particularly annoying, suffering from an association with Solyndra.

In terms of the broad market, Australia, Hong Kong, and Spain have extreme positive divergence in their money flow relative to price, while the dollar related ETFs are showing negative divergence. Everything seems poised for the dollar to go DOWN, which is perplexing unless somehow Europe gets a temporary respite from their troubles.

Even stranger, the US markets are also poised to go down WITH the dollar. Most peculiar.

It’s impossible to guess, and it is entirely possible that the divergences in money flow and price movements simply show that this is not a market driven by investors, but by political events that cannot be captured in any technical snapshot.

Market timers continue to get faked out, and I’m not sure who is actually profiting any more.

Everything’s a hold right now.

Tim

[ericoleman]

Thank you for sharing, Timothy. Are you using the Effective Volume Money flow to track the respective ETF's (EWH EWP EWA)? Or do you use additional tools for money flow analysis? Also, when you refer to dollar related ETF's, is it just UUP, or are you including others?

I always like reading your posts. Thanks again.

[Timothy Clontz]

Eric,

Thanks for your kind words!

Pascal and Billy have developed a trend following tool with their effective volume, which is extremely profitable for short term traders.

I'm experimenting with a mean reversion system using non-effective volume; volume not associated with price movements. It's slower, and in a live testing stage. The idea is to try to stretch technical analysis out to a year timeframe, which is the minimum for a fundamental investor.

The jury is still out on whether it works synergistically with fundamentals.

As for the dollar, I'm looking at UUP for negative divergence, but also other currencies and gold for positive divergence. When those both occur, I consider that as confirmation that money seems to be betting for the dollar to go down.

I don't understand it, but I'm curious to see what unfolds.

Tim