Buyers In Control - December 2, 2011

[Billy]

The Sector page of the PascalA_List spreadsheet, and the Sector List, are great tools, but in a strong trend, almost all sectors tend to go into buy or sell mode. I wondered if you or Pascal had any thoughts on the best way to approach creating a ranking of sector forecasts (i.e., how they are likely to perform over the next few days or weeks) for those of us who might want to rotate into the best sectors, or hedge by going long the best (forecast) sectors and short the weakest ones. Thanks!

Taw 55,
The best indicator I know for sector rotation is relative strength.
The best book I know on the topic for multi-month investment timeframes is by Michael J Corr:
http://www.amazon.com/Smarter-Invest...2853400&sr=1-1
But the paradox for short term trading is that you must buy the worst short term RS sectors on a 20 DMF buy signal when confirmed by Pascal’s sector lists.
Billy

[nickola.pazderic]

Billy,

I'm playing along at home here, and I'm also currently at 1/3 my original position. So far so good. I know this is not a universal prescription, but I certainly appreciate your candor in the service of education.

My question may have been addressed implicitly or explicitly previously. If so, my apologies.

It is this: At this point I set my speculation in the robot trade at approximately 125% account, calculated according to net exposure. Acting in this manner I've secured fantastic gains at times with a risk of only 40%of my capital in the account.

In your calculations, do you wager your entire account at 100% in 3X instruments and then adjust your holdings according to the risk management tactics you adopt? Or, do you like me, wager only an amount that would equal an exposure to a given percentage of the net liquidating value in your account?

For example:

An account of 73,140.00 USD would have allowed me to enter a 100% position of IWM at yesterday's robot price of 1000 shares-- a 1000 share or 100% exposure. However, with the same amount of cash I could purchase 1671 shares of TNA, which would increase my total exposure (as I calculate it) to 5013 shares of IWM, which seems to me to be an exposure of over 500%.

Any thoughts?

Many thanks,

[Billy]

Billy,

I'm playing along at home here, and I'm also currently at 1/3 my original position. So far so good. I know this is not a universal prescription, but I certainly appreciate your candor in the service of education.

My question may have been addressed implicitly or explicitly previously. If so, my apologies.

It is this: At this point I set my speculation in the robot trade at approximately 125% account, calculated according to net exposure. Acting in this manner I've secured fantastic gains at times with a risk of only 40%of my capital in the account.

In your calculations, do you wager your entire account at 100% in 3X instruments and then adjust your holdings according to the risk management tactics you adopt? Or, do you like me, wager only an amount that would equal an exposure to a given percentage of the net liquidating value in your account?

For example:

An account of 73,140.00 USD would have allowed me to enter a 100% position of IWM at yesterday's robot price of 1000 shares-- a 1000 share or 100% exposure. However, with the same amount of cash I could purchase 1671 shares of TNA, which would increase my total exposure (as I calculate it) to 5013 shares of IWM, which seems to me to be an exposure of over 500%.

Any thoughts?

Many thanks,

Nickola, I have a visitor now and will reply this weekend.
Billy

[taw55]

Taw 55,
The best indicator I know for sector rotation is relative strength.
The best book I know on the topic for multi-month investment timeframes is by Michael J Corr:
http://www.amazon.com/Smarter-Invest...2853400&sr=1-1
But the paradox for short term trading is that you must buy the worst short term RS sectors on a 20 DMF buy signal when confirmed by Pascal’s sector lists.
Billy

Billy,
Thank you very much for the book reference and great tip - I will definitely try that out! I also remembered that the SIGR file available on the site has a kind of sector ranking, and so am looking at that as well.

Thanks Again,
Terry