Economic Calendar This Week

Monday
2:00 PM Treasury Budget Feb

Tuesday
8:30 AM Retail Sales Feb
8:30 AM Retail Sales ex-auto Feb
10:00 AM Business Inventories Jan
2:15 PM FOMC Rate Decision Mar

Wednesday
7:00 AM MBA Mortgage Index 03/10
8:30 AM Current Account Balance Q4
8:30 AM Export Prices ex-ag. Feb
8:30 AM Import Prices ex-oil Feb
10:30 AM Crude Inventories 03/10

Thursday
8:30 AM Initial Claims 03/10
8:30 AM Continuing Claims 03/03
8:30 AM Empire Manufacturing Mar
8:30 AM PPI Feb
8:30 AM Core PPI Feb
9:00 AM Net Long-Term TIC Flows Jan
10:00 AM Philadelphia Fed Mar

Friday
8:30 AM CPI Feb
8:30 AM Core CPI Feb
9:15 AM Industrial Production Feb
9:15 AM Capacity Utilization Feb
9:55 AM Mich Sentiment Mar

Performance Check

Advantages of Owning ETF's

One of the common dilemmas in the market place is weather to buy individual stocks, or basket of equities via ETF's. Here is the list of things which favor ETF's over stocks:

• Risk management - Investing in one company will always leave you vulnerable to the worst case scenario: losing entire investment because the company went belly up. Alternative to this is to invest in a theme, such as, particular industry. ETF's are usually playing off of certain themes (country, sector, industry, etc). The probability that a certain market segment will disappear all together is significantly smaller than having a bankrupt company. For example, if one had invested in Washington Mutual a few years ago, he or she would have lost everything. Having XLF (Financial Sector ETF) in his or her portfolio would not have been great business decision either, but it would have preserved him or her a half of the capital. In the end, surviving in the markets is prerequisite for any kind of success.
• Portfolio management - When managing their portfolios, small investors tend to hold onto losing positions for too long and sell winners prematurely. Owning ETF takes this downside from the equation, and makes investing sensible again.
• Overall returns - Buying and selling stocks carriers commission cost with it. Over time, they could take a nice bite out of total returns. In addition, returns are negatively affected by investors' tendency to hold losers and sell winners, which was described in the previous point. I bet that actual data would support passive investing hypothesis.

Owning ETF's versus individual stocks has some disadvantages too. For example, it is much easier to hit a home-run with a stock than with an ETF. However, human tendency to sell prematurely offsets this perceived benefit. This topic could be explored much further, but I decided to focus on key points.

In summary, in a long run, most investors will be better off owning ETF's than stocks. However, when you own just ETF's, there is not much to talk and brag about during weekend barbecues.

Economic Reality Check

A Shakeout Or The Breakdown?

I think big jobs report on Friday will show us the way. Despite today's losses, the bulls are in much better shape than bears. Economic fundamentals are clearly still pointing to expansion. Unless some geopolitical event bubbles up, stocks look poised to go higher. Let's see what happens on Friday...

February Net Worth Growth +2.5%

Economic Calendar This Week

Monday
10:00 AM Factory Orders Jan
10:00 AM ISM Services Feb

Wednesday
7:00 AM MBA Mortgage Index 03/03
8:15 AM ADP Employment Change Feb
8:30 AM Productivity-Rev. Q4
8:30 AM Unit Labor Costs - Rev Q4
10:30 AM Crude Inventories 03/03
3:00 PM Consumer Credit Jan

Thursday
7:30 AM Challenger Job Cuts Feb
8:30 AM Initial Claims 03/03
8:30 AM Continuing Claims 02/25

Friday
8:30 AM Nonfarm Payrolls Feb
8:30 AM Nonfarm Private Payrolls Feb
8:30 AM Unemployment Rate Feb
8:30 AM Hourly Earnings Feb
8:30 AM Average Workweek Feb
8:30 AM Trade Balance Jan
10:00 AM Wholesale Inventories Jan

Performance Check

Bull Time

The market continues to grind higher. A fear of missing a rally among small investors is slowly starting to take over. Even the smallest pull-backs are bought. However, mid-day buying intensity seems to be weakening. Nonetheless, don't forget that that can be changed on a dime with another wave of good economic data. The world seems to be getting over EU debt crisis (for now). When the market starts talking about consumers' ability to adjust to higher gasoline prices, you know the bull market is firing on all cylinders.

I opened one new position in my trading account today, and took partial profit from an existing position. Members, please log-in for more info.

Monkey Economy as Irrational as Ours

Members Only Site: SLV Trade

I started actively trading SLV five months ago. I used capital from my trading account for this on-going trade. After 33 trades, return on (mean) invested capital amounted to 30.6% (or 73.5% per year). All 33 trades were profitable, with average $46.83 gain per trade. It is important to note that I do not pay any commission, without which this strategy would not be as effective. Every trade was posted at the Members Only site within minutes of their execution. Annual membership is still only $50. If you join by the end of this month, I will throw in one month free of charge. Make sure you mention this special in your e-mail. Feel free to contact me any time at: penguinsgoldenegg@yahoo.com.

Performance Check

Climbing A Wall Of Worry

• S&P500 +0.4%
• Bulls still holding up well
• S&P500 +8.4% YTD
• ROTH IRA +12.6% YTD
• Trading account update (members)
• Net worth: best quarter since Q1'11

More Market Consolidation

The market seems to be consolidating just above (and at) previous resistance area, which would be somewhere around/above 1355 for the S&P500. The bulls are hopeful that this consolidation will serve as a base for the next leg up. They seem to be holding their ground. Rightfully so, I would add. The bears, on the other hand, are nowhere to be found these days. I think majority of bears are waiting for a clear signal of a reversal - obvious price breakdown. For now, the market is not offering anything even remotely close to that.

Unfortunately, I have not had time to update free site over the last few days. I've had some issue with my laptop again, so my efforts were limited to the paid site and members.

NYSE Holiday Schedule 2012

The market is closed on:
January 2 (all-day)
January 16 (all-day)
February 20 (all-day)
April 6 (all-day)
May 28 (all-day)
July 3 (after 1pm)
July 4 (all-day)
September 3 (all-day)
November 22 (all-day)
November 23 (after 1pm)
December 24 (after 1pm)
December 25 (all-day)

Economic Calendar This Week

Wednesday
7:00 AM MBA Mortgage Index 02/18
10:00 AM Existing Home Sales Jan

Thursday
8:30 AM Initial Claims 02/18
8:30 AM Continuing Claims 02/11
10:00 AM FHFA Housing Price Index Dec
11:00 AM Crude Inventories 02/18

Friday
9:55 AM Michigan Sentiment - Final Feb
10:00 AM New Home Sales Jan

Performance Check

Eyeing All-Time Highs

• S&P500 +0.3%
• DOW at 13K
• Another mid-day reversal
• S&P500 +1.4% this week
• 2012 picks +3.2% this week
• S&P500 +3.7% this month
• February picks +6.4% this month 
• S&P500 +8.2% YTD
• 2012 picks +19.8%
• Investors eyeing all-time highs

The Breakout?

• S&P500 +1.1%
• S&P500 +8.0% YTD
• S&P500 above its 10-day resistance
• Added $$ to one position (members)
• Net worth growth +6.4% YTD
• Net worth at all-time high

Trading Range Blues

• S&P500 -0.5%
• Spotlight on Greece and Apple
• Sideways trading range
• Five-day resistance 1355 held up
• Five-day support 1338 holding up too
• No closing hour buying frenzy today
• No QE3? I highly doubt it
• Sleepless night with the little one :-(

Cash At Work

This morning, I moved $21K from cash into equities (retirement portfolio). In addition, I opened one trade position. Members, please log-in for more details...

Pushing Higher

• S&P500 +7.4% YTD
• Strong closing hour
• Oil above $100
• Gold pushing towards $1850 again
• No new trades today
• ROTH IRA +8.7% YTD
• Net worth +5.6% YTD
• Membership info

Wealth

"Today the greatest single source of wealth is between your ears." ~ Brian Tracy

Performance Check

Five Stages of Trader Evolution

1. Gambler. This is the oldest trader's ancestor. He was fairly naive, highly emotional and addicted gambler. The gambler perceived the market as his casino-like entertaining arena. He bet large and he bet often. His goal was to get rich quick. Most, if not all, of his capital was quickly distributed to more evolved traders.
2. Hunter. He came to understanding that markets are not random, but quite predictable. His quest was to find a single technical indicator which will make him rich. The hunter spent countless hours back testing expensive software algorithms and other people's methods. Unfortunately, most of his capital was promptly distributed to more evolved traders. A great deal of traders stayed stuck in this stage of development for a relatively long time.
3. Analyst. He gave up the quest for "holly grail". He came to understanding that the market is much more complex and dynamic place, so he applied his analytical skills to conquer it. The analyst developed better understanding of market interdependency and correlations. He was able to develop fairly sophisticated methods for identifying low risk/high reward trading opportunities. Unfortunately, he was not the master of his emotions. He would sell his winners too early and hang onto losers for too long. His capital was distributed over time, at relatively slow rate, to highly developed traders.
4. Manager. At this stage, our ancestors got grip of proper money management technique, which enabled them to control their emotions in the market place. The manager was extremely systematic in his decision making process. He fully understood importance of active account management, position sizing and capital preservation. Unfortunately, he was often under-capitalized, which affected his bottom line via high commissions and other cost of doing business. Also, he could not commit to trading full time. Although, he was not net loser, his results trailed those of professional traders.
5. Professional trader. The final stage of trader evolution. Properly capitalized, fully developed and highly motivated, the professional trader takes a full advantage of his predecessors. He is aware of his weaknesses, so he dedicates time and energy to work on them. He is humble, unemotional and self-sustaining. His only goal is to trade well.

Which stage are you at?

A Rising Tide Lifts Up All Boats

• S&P500 +0.2%
• S&P500 +7.3% YTD
• ROTH IRA portfolio +10.2% YTD
• 401k portfolio +7.4% YTD
• February picks +4.6% (members)
• 2012 picks +18.9% (members)
• Net worth gain $25K YTD

Statistics

"Statistics are like prisoners under torture: with the proper tweaking you can get them to confess to anything." ~ John Rothchild

Economic Calendar This Week

Tuesday
3:00 PM Consumer Credit Dec

Wednesday
7:00 AM MBA Mortgage Index 02/04
10:30 AM Crude Inventories 02/04

Thursday
8:30 AM Initial Claims 02/04
8:30 AM Continuing Claims 01/28
10:00 AM Wholesale Inventories Dec

Friday
8:30 AM Trade Balance Dec
9:55 AM Mich Sentiment Feb
2:00 PM Treasury Budget Jan

2012 Picks - Update

2012 picks, published in December at Members Only site, continued their strong run last week. This portfolio gained +3.89% last week vs. S&P500's +1.42%. It has outperformed the main market index in all but one week since inception. Big winners this week included: CYOU +14.66%, CMI +11.99%, MGM +8.29%, and CROX +6.08%. After falling for three consecutive weeks, RES finally stabilized this week. However, the stock is still the worst performing equity in the portfolio. It is interesting to note that BRLI, CMI and MGM gained in every single week (7 weeks) since the portfolio inception. If you think stock lists like this one can be useful to you, consider joining Members Only site, where I share all my picks, live trades, and all retirement portfolio positions.

Performance Check