Technical Analysis/Moving Averages

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B24's picture
B24
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Are many people using technical indicators for trading in and out of major positions (i.e. 200-day moving averages, 10-month moving averages, etc.) or indexes?  Long-term, there is a lot of value in doing so (downside protection).  However, short-term, it can be quite difficult (due to "whip-saw" false indicators).  Just curious.

B24's picture
B24
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Ice, I know you use indexes.  What is your allocation/buy-hold strategy?

jamesbond's picture
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I have always used technical analysis even though many discount its effectiveness . If you want some good information on the economy and overall economic trends, i suggest you follow David Rosenberg. I have read him for years and he is an excellent economist and isn't a bull or a bear. He was at merrill for a long time and left last month to go to Gluskin Sheff in Canada. Subscribe to his daily newsletter. 

chief123's picture
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Joined: 2008-10-28

I use them as a guideline... but am not religious about it, but also follow point and figure charts by dorsey wright.. but for giggles look at thishttp:

//ichart.finance.yahoo.com/z?s=AGTHX&t=my&q=l&l=on&z=m&p=m200&a=

chief123's picture
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chief123's picture
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B24's picture
B24
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Chief, I can't link to your link, and I can't see your last two posts, but I think it's the 200 day moving average for Growth Fund, indicating a BUY?
 
I think this is one of those times that a technical indicator might get you bass ackwards.  You miss the 30%+ runup, and then buy in when the rally may putter out.  That's why I look more at 10 and 12 month moving averages to look at longer secular cycles.  Shorter charts can cause "whipsaws" in and out of securities.

chief123's picture
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Joined: 2008-10-28

Yeah i couldn't get the graph to show up.. I tend to use it when getting out of the market instead of back in..

Do you use the Simple or exponential?

B24's picture
B24
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Joined: 2008-07-08

I look at both, but EMA is probably more appropriate for longer MA's (like 200 or 300 days) because it weights recent trends more heavily.
I agree, the "getting out" part is more important than the "getting in" part.  There is less risk in getting back in if you look at the charts and trends, and start to DCA when things are looking better.  For example, I started DCA'ing back into the market a few months ago.  The charts didn't say to, but I figured even if it wasn't the bottom, we were buying back in at extremely good values.
 
Do you do this with ETF's, index funds, active managed funds?  It's tough to implement this at Jones (they don't allow active movements inside the advisory accounts, and I don't want to create commissions with every trade, so I am stuck with mostly A and C share funds), but I am getting better at knowing how to construct the portfolio from day 1 to make it easy down the road.

snaggletooth's picture
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Joined: 2007-07-13

B24 wrote: 
Do you do this with ETF's, index funds, active managed funds?  It's tough to implement this at Jones (they don't allow active movements inside the advisory accounts, and I don't want to create commissions with every trade, so I am stuck with mostly A and C share funds), but I am getting better at knowing how to construct the portfolio from day 1 to make it easy down the road.
 
Our group does a lot of tech analysis, but it's only individual stocks and ETF's.  We have a proprietary screening system that scans every public issue. 
 
To reduce some risk in individual stocks, if the scans show that a lot of energy companies, for example, are starting to turn up, we'll buy the ETF.  Regardless of ETF/stock, we'll use stop loss orders at -15 to -20% and increase them as the stock/ETF goes up.  I have no idea how the scans work and the details of it, as it doesn't interest me...
 
B24, your platform at Jones is extremely prohibitive for this.  If you charge commissions, it's not cheap.  In an advisory account, it works well.

B24's picture
B24
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Joined: 2008-07-08

Snags, that all makes good sense.  Yes, it is difficult in a commissioned world.  However, I tend to use it for broad-based funds, and can move in and out with the existing fund family.  For example, if I own a large cap value fund at American, I can exchange it out for a short-term bond fund or others.  But I also think I do not get adequately compensated for this type of service with 25bip trails. 

chief123's picture
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Joined: 2008-10-28

Yeah you definitely don't(which is why I left)... I farm out a tactical allocation etf portfolio for 25-30% of my clients accounts.. But I do use it on actively managed funds that have less than 45% turnover...

B24's picture
B24
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Who do you use?

chief123's picture
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active or etfs?

B24's picture
B24
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Active

chief123's picture
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Fairholme, First Eagle Global, Permanent Portfolio..

chief123's picture
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Joined: 2008-10-28

Sometimes, Jordan Opp, WASAX, ISISX

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