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Market Lab Report - Important Performance Update 11/17/15

Major averages rose but on lower, below average volume. Both the S&P 500 and NASDAQ Composite Indexes found logical support at their 10-week moving averages after selling off in cascading fashion over the prior three trading days. As institutions scramble to keep up with the major averages, it was not surprising to see big money pour into some of the mega-cap technology names such as FB, NFLX, AMZN, and GOOGL, most of which found support at their 20-day moving averages.

Indeed, in this topsy-turvy market, the trend following wizards tracked here http://www.automated-trading-system.com/trend-following-wizards-october-2015/ had another down month, and are down yet again this year.

That said, at Virtue of Selfish Investing, 2014 was a banner year as the performance by Gil Morales was a home run, and those members who took profits in context with the chart and cut losses short were also able to also well outperform the major indices.

While 2014 was challenging but profitable, trendless 2015 has really tested one's discipline in following their rules and being nimble. 2015 has been an up year so far for us, but considerably more challenging than 2014. That said, the VIX Volatility Model which is in beta has shown great promise in its profitability in backtests and more recently in real-time trading with the implemented fail-safes, even in this largely trendless year.

That said, always remember that the only thing that never changes is change, so always assume markets will always change. Thus, the disclaimer "past performance is no guarantee of future performance" always holds true for any strategy. Static black boxes have a limited life expectancy. Self-learning/self-evolving strategies are essential.

Both timing strategies at Virtue of Selfish Investing are self-learning as are our stock trading strategies. What worked before does not necessarily work now. The Market Direction Model adjusted to quantitative easing in 2009 among other things which accounted for its ability to continue to outperform while other timing strategies failed. Indeed most of the market timing websites around back then are now dead links. But as market manipulation by the Fed intensified as central banks began stepping up their quantitative easing programs, markets became the most challenging we have witnessed in decades. In the last few years, when markets looked like they were about to blow apart, they would find a shallow floor and head higher, but weakly so. And when the markets would fall, they would reverse a few weeks of gains in just a few days. Meanwhile, leading stocks would fall even harder than the fast falling market averages.

But every problem contains its own solution. We put more focus on how to properly trade individual stocks, Thus the strategy of taking profits when you have them in context with the stock's chart and the general market has proven profitable. Of course, keeping stops extra tight has also been essential given the behavior of most leading stocks when markets fall. Those very few that buck the trend are a big clue and can sometimes be held.

Taking a Zen approach to the markets is the path every trader/investor should take. Trading in the now, in the present moment, and adjusting your trading to what stocks and the general markets are telling you is key to keeping trading strategies profitable. Thus every investor/trader can become a self-learning organism.

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This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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