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Market Timing - January Tug of War Edition

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January 05, 2012 – Comments (4) | RELATED TICKERS: EXK , SLV , GPL

I will use this blog entry as a holding place for my tax-deferred market timing trades for January. I sold out of my large cap value fund on Tuesday 1/3 and captured a nice 1.6% bump. Markets were flat yesterday and today so I haven't really captured any notable performance gains or lost anything against the broader indexes.

 I'm still staying on the sidelines in cash for a couple days. I realize that unemployment claims has the chance to push the market higher on Friday 1/6, but I also see some red flags out of Europe with Hungary's poor bond auction and Italian bond yields back over 7%. I think if Europe gets jumpy the dollar will soar even faster and domestic equity markets will take it on the chin. At this point I actually want the European markets to tank so that the ECB, Germany, France and others will enact real policy responses.

For the first time in my life, I am taking an increasing position in the silver miners to hedge against a weak dollar. Each day I realize that there is a tug of war going on between a stronger dollar relative to the Euro and a print happy fed. I think the print happy fed will keep inflation moving higher in the next 6-12 months. In the short run (1-3 months) while Europe tanks, I am happy to pick up more shares of the miners at bargain basement prices.

4 Comments – Post Your Own

#1) On January 10, 2012 at 3:56 PM, RallyCry (< 20) wrote:

I moved from cash back into large cap value prior to market close today 1/10. I think the last several sessions of low volume and low volatility should ease. I expect good earnings guidance from financial and technology names in the next several days and a market advance on the order of 3-5%.

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#2) On January 17, 2012 at 4:34 PM, RallyCry (< 20) wrote:

I am back in cash at market close today. The action we saw today Tue 1/17 with the market rolling over did not look encouraging. Europe is like a festering wound that won't go away. It seems like somedays we can overlook it, but every few days they rear their ugly head just in time to knock our market down. The news out of China wasn't impressive either. It seems like developed and developing economies alike are grinding to a halt outside of the U.S. In the past week that I've held onto large cap value for a rally that never came.

I expect my final return for this past week to be about 0.50% while the S&P 500 was up 0.001% Neither inspiring nor depressing. But I am only looking to outperform by a few percentage points. If we get a sell off this week, I'll reconsider moving back into large cap value.

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#3) On January 30, 2012 at 10:00 PM, RallyCry (< 20) wrote:

I have gotten decidely more bullish recently and on 1/27 I moved 50% of my balance from cash to small cap growth and the other 50% from cash to small cap growth today on 1/30. I was not very active this month so it will be interesting to see how my performance for January stacks up to the indexes seeing how I in large cap value for roughly a week and out of the market for the middle to latter portion of the month.

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#4) On February 08, 2012 at 12:27 AM, RallyCry (< 20) wrote:

Final stats for January were pretty woeful for me and pretty spectacular for the market as a whole. My 1.29% return underperformed the S&P 500 which returned 4.36%, the large cap value fund returned 5.06%, and the small cap growth fund returned 6.70%.

I think my biggest weakness during the month was underestimating the cumulative effect of small consistent moves up over several trading sessions and recognizing the fading influence of Europe on U.S stock market performance.

I have been parked in small growth in February and have outperformed the S&P 500 and large value by 1.5% to 2% at around a 4% return this month so far. I am strongly considering an exit point to preserve my robust monthly return. Volatility to me is uncomfortably low and suggests a near term pull back  may be imminent.

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