Don't  Invest  in  Mutual  Funds

Invest  in  Your  Education  Instead 

It should be an eye opener for anyone that read the copy of the Barron's weekly publication of March 11th 2019.  They did a detailed study of the performance of the top 3794 actively managed mutual funds.  It did not come as a surprise to me that over 82% of those funds lost money in 2018.  Just a handful of them - 7 to be precise - posted double digit returns.  How is that possible?  You would think that the professional money mangers would be able to do better.  They are charging you a fee for managing your portfolio after all.  Most of their losses occurred after attaining the September highs.  For investors and traders that follow the IBD (Investors Business Daily) methodology of Growth Stock Investing and trading, they would have gotten out into CASH every time that the market went into correction.  It would have stopped the bleeding and the draw down of portfolio every time the market went into correction.  

Why did the professional mutual fund managers did not do that to mitigate losses?

In 2018, we had 8 days when the IBD changed the market pulse to  "Market in Correction".  This is a signal for retail investors to start taking defensive action and begin the process of accumulating  CASH.  When the indexes begin to slide down the precipitous path of slicing below the 50 day sma(simple moving average) and heading down towards the 200 day sma(that's where you are getting toasted and burning through your portfolio), it's time to curtail your losses and begin to have the mindset of CASH as a position in your portfolio.  Mutual funds and other institutional funds cannot do that over night like we as retail investors can.  It takes them several weeks to wind down their  huge positions.  It's no wonder the mutual funds did not perform well last year when they suffered losses during those 8 periods when the market went into a correction mode.

You should seriously consider investing in your education and learn to actively manage your portfolio

Market  Conditions

Currently the Market pulse column in IBD still identifies it as  "Market in a Confirmed Uptrend".  We have 11  "Distribution days"   between the  $SPY  and the  $NASDAQ.  Bulk of those days (7 in all) have occurred in a cluster within the last week.  That ought to raise some cautionary flags for all of us.  It's a time to be looking over your portfolio and positions and have a plan in place to mitigate losses.  $SPY  and  $QQQ  indexes have been hovering around the 200 day sma that is acting as a resistance.  We need for the institutions to come in and support the market if the market is going to make any further progress.  We are just shy of  +7%  to attain all time highs with  $SPY  attained on Sept 20th.  

We had a disappointing labour report last Friday.  One bad report does not portend a trend however.  We do have the best unemployment rate of just 3.8%. since the late 60's.  US stock market is the best performing market in the world and there is no sign of a recession to speak of.  I would not pay much attention to all the media noise that reminds us that we just celebrated the 10th anniversary of the bull market that started in 2009 March.  Just follow the charts and let that decide for us when to get in and out of the market.  Currently the longer the major indexes  $SPY and the $QQQ  stay close to the 200 day sma, the better the prospects of leading stocks consolidating and building new bases.

Stocks  to  Monitor

There are several stocks that have allowed us the opportunity to establish a 2nd and 3rd positions as the stocks have attained gains since the  "Follow Thru"  day of Jan 7th.  Concentrating your portfolio to just a few leading stocks is the proper way to increase the size of your portfolio.  If the market goes into a correction mode this coming week with more  "Distribution Days",  than one should start scaling back their positions and start raising  CASH  instead.  Here are the stocks that have survived the carnage of  "Distribution Days"  we had last week.  They are all consolidating at the 20 day sma and building a a new base. 

1. $TTD
2. $CYBR
3. $TWLO
4. $XLNX
5. $PANW
6. $UBNT
7. $SSNC
8. $PLNT
9. $PAYC
10. $INTU
11. $ANET
12. $AMT
13. $KEYS
14. $MNST
15. $MA
16. $V
17. $ETSY
18. $MPW
19. $VMW
20. $ZS
21. $DG
22. $DLTR
23. $FL
24. $NKE
25. $SBUX 
26. $NEE
27. $DUK
28. $D
29. $AEP
30. $EXC

Happy Trading!

Amin