Mullooly Asset Management

Where is the Support Line for the Dow Jones

Thomas Mullooly — Fri, 04 May 2012 17:50:36 +0000

In this video, we take a look at the POWER of support lines. Support lines often act like brick walls, meaning we tend to get a bounce off a support line. And it takes a LOT to break a support line. Here the Dow Jones is approaching the short term support line at 12850. A break would generate a second sell signal in the near term, and also put the Dow Jones closer to a potential spread quadruple bottom at 12700.

Again, it takes a lot to break a support line. This support line has been intact going back to last year. It’s also interesting to note this chart of the Dow Jones Industrial Average has been negative for eleven weeks now, significantly longer than average. The average weekly momentum in either direction, positive or negative is typically six to eight weeks. In these kinds of settings, we usually experience a bounce. But with markets conditions defensive at the moment, we need to be prepared for both negative market conditions and positive market conditions.

Be prepared one way or the other. And call us at 732-223-9000 if you have questions!

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.
If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website. Under no circumstances should the content discussed here to be considered specific investment advice.

Are Interest Rates Really On Hold?

Thomas Mullooly — Sun, 29 Apr 2012 12:01:31 +0000

The Federal Reserve has announced they are “on-hold” through next year, and likely well into 2014. Does that mean interest rates will stay low that entire time?
Maybe not.

The “bond market” will actually do a “daily” job of setting rates. The bond market helps to balance the supply and demand of buyers and sellers of bonds and all things fixed income. But, like stocks, anything with a number can be plotted on a point and figure chart. The patterns that emerge really tell a different story about interest rates.

Remember, when rates rise, the VALUE (price) of your existing bonds FALL.
When rates (yields) FALL, the value of your bonds RISE.
There is a direct inverse relationship between interest rates and bond yields. If one side goes up, the other side goes down, much like a see-saw.

April 16 2012 Update

Thomas Mullooly — Mon, 16 Apr 2012 19:59:33 +0000

I was so focused on getting to the market update in the video, I completely overlooked the very FIRST chart in the video (scroll down for the video below)!

The chart (below) is the VIX Index as of April 16, 2012. You can click it to enlarge it. The “VIX” is the volatility index, sometimes called the “fear” index.

While the market has been rising the past three months, the VIX had been churning. The VIX initially dropped to start 2012, and traded in place between roughly 16 and 20 for most of January, February and into mid-March. However, the move in April at $17.50 broke the overhead resistance line and pushed VIX into a positive trend.

So, apparently, volatility is coming back in vogue. The chart has now risen and is very close to approaching the spread quadruple top (highlighted in yellow). If the VIX were to break above 21 (a break occurs at $22), we can expect escalated volatility. Doesn’t mean it will happen!

Point and Figure Chart of VIX on 4-16-2012

It’s also interesting to note that this chart is now in a short term positive trend. Looks like the “quiet weeks of mid-January to mid-March” may be a memory.

On my mind:
While the VIX is not a market indicator I use as a deciding factor when managing your money, it’s not helpful to see a move like this.

There’s also the “sell in May and go away” mantra. This could be kicking in, but the indicators would need significantly more deterioration (as we saw in 2010 and in 2011) to really register.

There is also a report of an informal “Presidential Election” year pattern (not the Presidential Cycle often quoted from Stock Traders Almanac). This Presidential Election Year activity historically shows a pull-back in April (right on time), then a rally into the November election (assuming the market LIKES the leading Candidate). We’ll see.

Remember, when the charts change, we WILL change.

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.

Bull market behavior vs. Bear market Behavior

Thomas Mullooly — Tue, 10 Apr 2012 13:02:15 +0000

Big differences in the market depends on whether the backdrop is bullish or bearish.
Take a look:

2012: First Quarter Roundup

Thomas Mullooly — Tue, 03 Apr 2012 11:51:46 +0000

The First Quarter 2012 started with a bang – the market was up approximately 200 points on the first day of trading, and never looked back.

Is Biotech The Next Sector To Make A Move?

Thomas Mullooly — Fri, 30 Mar 2012 14:26:02 +0000

With the stock market at overbought levels, finding the right sector to put money to work becomes more important than ever. With this in mind, we look at what happened with homebuilders, and how that sector moved from an average market performer, to an over achieving sector.

We noticed that the bullish percent index for the homebuilder sector turned positive, in late November/early December 2011. We also observed that the percent of homebuilder companies in a positive trend also turned positive at the same time. Additionally, we noticed the percentage of companies with improving relative strength turned to X’s shortly thereafter.

While the experts were still telling investors to avoid the home building sector, in the past three months this sector rose 22%. Now these same experts are calling the bottom of the housing market and recommending investments.

This is why it can be very damaging to your portfolio (and damaging to your investment returns), if you pay too much attention to what the media is reporting.

The media — even the financial media — can often be way behind the curve. Most of Main Street investing, however follows the financial media. This is one reason why I continue to employ the use of point figure charts to manage your money. It’s important to see which sectors and which specific names are starting to see increased demand (and which other names are starting to see an increase in supply), and then move accordingly.

Using this same approach, we have begun to notice increased demand in the biotechnology sector.

We’ve noticed that the bullish percent index for the biotechnology sector has turned positive. We also observed the percent of biotechnology companies in a positive trend has also turned positive. Finally, we have noticed the percentage of companies in the biotech sector with improving relative strength continues to increase. This certainly helps put the biotechnology sector on our radar scope.

Are the Financials Rising From The Dead?

Thomas Mullooly — Mon, 19 Mar 2012 15:03:55 +0000

On a point and figure basis, are Financial stocks — and possibly the entire financial sector — the modern day Lazarus, rising from the dead?

This entire sector of stocks has been left for dead by the side of the road for well over three years. But their recent action is making us pay attention. We do not know if this is merely a bump along the way lower, or the start of something a little more positive. As in all cases, when the charts change, we will change.

But here is the most important take-away: some of these charts are starting to move back in positive trends. And the market has continued to move higher in recent months WITHOUT the participation of financial company shares.

If the financial sector is truly re-awakening, this market could — emphasize could — have a longer run ahead of it.
In this video, we take a quick peek at the charts of the following companies:

Citigroup (C)
Bank of America (BAC)
JP Morgan (JPM)
Morgan Stanley (MS)
Goldman Sachs (GS)
Barclays PLC (BCS)
BB & T (BBT)
USBancorp (USB)
Wells Fargo (WFC)
PNC Financial (PNC)
NY Community Bank (NYB)
Bank of NY/Mellon (BK)
Banco Santander (STD)

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.

Here’s Why Financial Companies Might Be Rising From The Dead

Thomas Mullooly — Mon, 19 Mar 2012 12:31:54 +0000

In this podcast, we take a look at how (and why) financial companies may be rising from the dead. The stocks in the financial sector have been comatose for several years!

This is important because the financial sector is one of the largest sectors in the S&P 500 Index of companies. The market is scaling new heights — and has been accomplishing this WITHOUT the participation of the financial companies (banks, brokerage firms and insurance companies). If the re-awakening of the financials is for real, the market may have further to run.

We won’t predict what will happen in the future (whether near-term or long-term). When the charts change, we will change as well. I would also add the following:

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.

This High School Concept Can Help You Invest Smarter

Thomas Mullooly — Mon, 12 Mar 2012 16:34:58 +0000

It’s true: Understanding the Bell Curve Can Help You Invest Smarter

I will stress again: there seem to be a LOT of people in the investment business who want to complicate the investment process. It does not need to be overly-complicated.

This is part II of the lesson on bell-curves and how they can help you. Here you can find part one of Bell Curve Money Management.

With bell curves, about two-thirds of the time most of the results you are examining are hanging out somewhere near the middle of the bell curve. Yes, there are times when things get really skewed way over to the right, and times when “the curve” gets skewed way over to the left. So, here’s a clue:

On a bell curve, when the ENTIRE MARKET is skewed way over to the right, DO NOT BUY it. When we refer to the market as “over-bought,” this is what we are looking at.

And, when THE ENTIRE MARKET is skewed way over to the left side of the bell curve, you may want to think about investing. Why?
Because it is considered “over-sold.”

Watch this short video (part II) on the Bell Curve:

I would also add the following: Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.

Investment Advisors and Brokers – Differences – Part II

Thomas Mullooly — Sat, 10 Mar 2012 15:50:48 +0000

There are so many differences between investment advisors and brokers that we made a SECOND podcast!

Some of the topics we discuss in this second portion of the podcast include:

How does Mullooly Asset Management manage money for clients if we are NOT with a brokerage firm?
Why does Mullooly Asset uses a discount broker like Charles Schwab or TD Ameritrade.
Why “assets under management” really matter to financial consultants, wealth managers, financial advisors, also known as stockbrokers.
Why a Registered Investment Advisor firm like Mullooly Asset does not really stress where your assets are held.

Also,

How did Bernie Madoff get away with stealing money from clients?
Was Madoff an investment advisor or a broker – or both?
Why who has CUSTODY of your assets is very important!

How can Mullooly Asset Management manage your 401k account (or your 403b annuity, or deferred compensation account) at work? But a financial consultant, financial advisor or stockbroker cannot.

Incidentally, you can get the first podcast here: Difference Between Investment Advisors and Brokers – Part I. You can also find our podcast on iTunes.

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.

If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website. Under no circumstances should the content discussed here to be considered specific investment advice.

Podcast:

An Idea Learned in High School Can Make You A Better Investor

Thomas Mullooly — Mon, 05 Mar 2012 20:18:59 +0000

It really IS true:

An Idea Learned in High School Can Actually Help You Make Better Investment Decisions

Yes, some of the concepts discussed way back in high school CAN make us better investors. But there seem to be a LOT of people in the investment business who want to complicate the investment process.

If you remember the concept of the bell curve from high school, employing HOW a bell curve works – could really help you become a better investor.

When it comes to bell curves, just remember, about two-thirds of the time most of the results you are examining are hanging out somewhere near the middle of the bell curve. Yes, there are times when things get really skewed way over to the right, and times when “the curve” gets skewed way over to the left. So, here’s a clue:

On a bell curve, when something is skewed way over to the right, DO NOT BUY it. The item can be considered “over-bought.”

And, when is skewed way over to the left side of the bell curve, you may want to think about investing. Why? Because it is considered “over-sold.”

Have I lost you yet? We need to focus on keeping investment concepts simple. Watch this short video and see what I mean:

Investment Advisors and Brokers – Differences – Part I

Thomas Mullooly — Mon, 05 Mar 2012 14:50:46 +0000

There are big differences between investment advisors and brokers in New Jersey (or stockbrokers, financial consultants, financial advisors, etc) and all around the United States. One group (stockbrokers and financial consultants) work for (are employed by) brokerage firms, banks and insurance companies.

Now, investment advisors CAN also be employed by brokerage firms. In that case, these folks are often “dual-licensed” so you never really know what capacity they are working as: “did you just recommend that to me as a stockbroker, or as an investment advisor?”

However, more and more investment advisors work independently. As we discuss in the podcast, Investment advisors have a fiduciary obligation to make certain they are acting in the client’s best interests at all times. the brokerage firm employee only needs to make sure there recommendations are suitable for their client.

One other point we try to clarify in the podcast is the technical distinction is “registered investment advisor (or RIA).” A firm may be registered as an investment adviser. The employees who dispense advice to their clients are technically deemed “investment adviser representatives (or IAR).” It is a mouthful telling individuals I am an “investment adviser representative of a Registered Investment Advisor.” It is much easier to say, “I own a Registered Investment Advisory firm in Manasquan, NJ.”

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.

An Over-Bought Market Condition

Thomas Mullooly — Tue, 28 Feb 2012 15:09:29 +0000

Over-Bought Market Condition:

What does an “over-bought” or “over-sold” market mean?, or asked another way, managing your investments can be a full-time job.

Here at Mullooly Asset Management, we use terms like “over-bought” and “over-sold” frequently. But today we’ll use a term you’ve probably not heard since statistics class: the bell curve, to explain what over-bought and over-sold conditions mean — and what an over-bought (or over-sold) market can look like.

There are TWO ways an over-bought market can correct:
1. The market can pull-back enough to off-set the condition. We won’t predict what will happen, and all markets are different, but when the market is bullishly constructed (as it is now), pull backs can be three, four or maybe five or six percent. In the last few years, we have seen three percents moves over a few DAYS. Yes, it can be that quick! In fact, when the market was in a bullish phase from March 2003 through the end of 2007, there was a single pull back of more than ten percent.

2. The market can “tread water” for a few weeks and not go anywhere. This event tends to “re-set” the ten week trading bands and “works off” the over-bought conditions that may exist. This “pause that refreshes” usually sets the stage for another big move up in a bullishly constructed market.

A third option also exists: the market could continue to move higher, which continues to increase the over-bought condition. Unhealthy and Risky.

In this video, we examine the current conditions of the NASDAQ 100 Index (QQQ), Apple (AAPL) and John Deere (DE). Take a look at the video below.

Retirement Accounts: Selecting the Right Investments

Thomas Mullooly — Tue, 28 Feb 2012 14:24:16 +0000

Just because a particular segment of the market is doing well, we should not just act blindly. If (for example) large cap funds happen to be doing well, it is not enough to simply buy ANY large cap mutual fund. What we do at Mullooly Asset Management is find the funds that display positive trends, along with good relative strength.

New York State Deferred Compensation

As an example, in the New York State Deferred Compensation plan, there are 33 mutual funds to choose from:

22 of these funds are large cap funds
11 of the 22 are on relative strength buy signals as of February 24, 2012.
Only ONE of the 11 funds is actually moving UP on its’ relative strength chart in a column of X’s.

So, out of eleven possible choices, there is only one clear winner, which we discuss on the podcast.

Why is this important?
Based on the data from Dorsey Wright & Associates, this one fund is up over eight percent in the previous thirty days, while all the other funds in the peer group were up — but only up between two percent and five percent.

Charts with relative strength BUY signals tend to outperform the markets (but not always) on the way up, and these charts also tend to (again, but not always!) pull-back a little less than their peers.

This becomes VERY important when we expect markets to pull back (as we are expecting in late February 2012). I would also add the following:

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.

Apple: Now What?

Thomas Mullooly — Tue, 21 Feb 2012 14:06:17 +0000

We’ve recived LOTS of calls and emails regarding Apple:
“What do we do with Apple now?”
“Should we be thinking about selling Apple?”
“Is it too late to buy Apple?”

All good questions. Take a look at this short video, and you will see the dramatic move Apple has made, and what is to come. We have mentioned Apple in a few recent videos, but because of its’ popularity, Apple needs its’ own video review. Remember, if you have a stock, mutual fund or exchange traded fund (ETF) you want us to analyze, get in touch with us!

401K: We Can Manage Your Account

Thomas Mullooly — Fri, 17 Feb 2012 15:31:34 +0000

401k: Login and look.

You need help managing your 401(k). Mullooly Asset Management provides a service where we will manage your 401k account for you. We have no interest in managing your entire company 401k plan. We work with individual investors, making changes to the investments in their 401k account, when it is time to make those changes.

Hire Mullooly Asset Management to manage your 401k account.

In this podcast, we discuss the steps we follow to manage your 401k account at work. This same process applies to your 403b annuity. This process also works with getting help for your deferred compensation account at work.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio. Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.

Point and Figure Charting: Not Just For Stocks

Thomas Mullooly — Sun, 12 Feb 2012 17:55:39 +0000

Point and Figure Charting is not simply for stocks, mutual funds or exchange-traded funds. Of course, if you have an investment in your 401k or your retirement account at work, we would be happy to analyze the funds and investments in your account for you. But we can analyze so many other topics, for example housing starts. In this video, we examine the point and figure chart for XHB, the S&P Homebuilders Index, along with the history (and chart patterns) of Housing Starts in the United States, going back over twenty-five years.

You have heard me say before, past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.

Investing In ETFs: Podcast

Thomas Mullooly — Sat, 11 Feb 2012 13:28:46 +0000

Exchange Traded Funds (ETF’s) can be the answer to: How do you buy expensive stocks, like Apple Computer? It is tough to have a balanced portfolio when one stock represents a large portion of the investment account. We have found there are plenty of exchange-traded funds where a large portion of the portfolio is invested in one stock (like Apple). This can be an alternative way to participate in a stock move… without owning the actual stock itself.

Regarding Apple: Several ETF’s (exchange traded funds) like QQQ and IYW invest a significant portion of their funds in this one investment. Likewise, with the exchange traded fund VOX, nearly half of the portfolio (46%) is invested in just two stocks, AT&T and Verizon.