Buying a house based on technical analysis

This is probably a bit of stretch as there are many other factors in buying a house. However, my technical analysis philosophy really helped me buy our house recently. The reason I wasn't trading much this year was that I was pre-occupied with buying and selling my home.

We sold in Michigan for a profit, which was not bad considered we bought in 2007 just as the market was crashing. So it was at a loss for 95% of the time we owned it.

Here's the price graph from Zillow with the buy and sell. Selling was a bit of luck and a lot of hard work, as we spent a lot of hours staging it perfectly to sell.   Five offers in 24hrs all over asking price.... luck or not?

On the other hand, our purchase in Vista, California was based on the same graph, but from the technical analysis perspective, buying into a solid rising trend after multiple lows had finally signal led a bottom to the post financial crash market. I was very focused on using the window of opportunity that the graph indicated, before prices rose so much that we were priced out of the market.

 We paid a little on the high side - a little above the trend line as you can see in the graph below, as it was a rising, sellers market. But according to Zillow, values in our new neighbourhood will rise 8.7% next year so it seemed worth the risk. Plus, this home is a long term investment....

Actually, based on return of investment from the downpayment we made, 8.7% translates to  projected 32% profit in a year. Welcome news after five years of torture from the economic crisis. Not that we are selling, it's our dream home in a dream part of the world....

LIQT Bounce in a downtrend 6.4% in 1 day...or a drunkards walk

Haven't been done any trading for months as I've been busy selling one house and buying another in other state...so we'll chalk this one up to luck. My investment banker friend (I only have one investment banker friend as I'm not exactly a Wall st type) would probably call it luck as well....

Or perhaps more eloquent description would be the title of the book by Leonard Mlodinow "The Drunkards Walk'.   This was a bit of a drunkards walk of a trade...could have gone either way so I'm not really talking credit for it.

So thats why I though 6.4% profit in a day wasn't something I was leaving on the table a minute longer.

Entry was based on the chart looked ready for a bounce based on the RSI at 10 on the 1hr chart. I don't even really know what LIQT  is or what it does so this was a 100% technical trade. The entry price was calculated on the day before based on where I thought the bottom of the bounce was. Turned out I kind of nailed it. Or is that just hindsight bias talking?

FSCSX 11.2% in 51 days

Closed this a couple of weeks ago and haven't had time to catch up.

Market is overbought and the sequester coming up. Closed with 11.2% profit (including the dividend) in 51 trading days.

4 out of 4 profitable trades in FSCSX in 2012, total gain 23%. Not bad for short term gains that are not taxed as short term gains because they are in my 401K....

FRESX overbought - Closing Long Position

Closing FRESX long position for similar technical reasons as VGSIX.

6.4% profit over 73 trading days. Zero commission if you have an account with Fidelity

Technical Sell Signals were similar to VGSIX

• Bollinger band - penetrated by green candles three times - sell signal
• MACD-5 line (blue) is way above the volume bars - sell signal
• RSI-5 above 90 - sell signal

RSI on the monthly chart is at 87, which indicates I could hang on longer to squeeze more out of this rally, but I'd rather take the profit. This trade is in my 401K account, where my emphasis on seeing the account balance go up every month and taking profits when they present themselves, rather than watching the balance go up and down with the market. 

Of the last 18  trades in my 401K, 17 were profitable, so the strategy of taking profits seems to be working. Better than the usual 'buy and hope' investing that is encouraged in retirements accounts.

If a 'buy and hope' investor had bought FRESX in 2008, around 5 years ago, they would have made around 6.4% profit over 5 years. They would have seen their investment be at a loss for around 90% of that time. If they'd had the courage to hold to the market bottom in 2009, they would have seen their investment lose 70% of its value within the space of a year, before recovering over the course of the following 4 years. 

Through use of technical analysis, this trade made 6.4% profit in under 3 months.

Kicking myself...Closed HPQ way too early

Here is how much I missed the HPQ rally by. Really kicking myself for not having more faith in my employer...lol

Whatever. Now the rally really is over, thinking of going short for the correction that looks very likely based on this chart.

Which is worse for your trading mind? Getting out too early and seeing that you could have made more profit? Or getting out too late and seeing profits you already had never realized.

VGSIX Overbought - closing Long Position

VGSIX (like most of the market right now) looks oversold based on multiple technical indicators.  Closing long position with 7.6% profit over 72 trading days.

Entry was a little early. Should have been a bit more patient.

Technical sell signals

• Bollinger band - penetrated by green candles three times - sell signal
• MACD-5 line (blue) is above the volume bars - sell signal
• RSI-5 above 90 - sell signal

Nice profit. Note to Vanguard. Won't be trading this fund again because it has a high commission - $75 both ways.

Sold FSHOX - 5.2% in 30 days and high risk of pullback

Monthly RSI of 94 means high risk of pullback. Sector seems strong, retail investors are piling into the market, time to be cautious and take profits.

This trade was right up the center of the channel marked in red, and 5.2% (including the dividend) in 31 trading days.

Pullbacks always happen faster than profits, and you can't use trailing stops on mutual funds with my broker. Profits in the bank rather than hope when the technicals say the rally is breaking down.

Timing Swing Trades on HPQ

Take your pick: these trades represent how crap I trader I am, or how good?

Trade 1: Entered too late based on the technicals.   HP was coming off a ten year low, so I needed some convincing that the bottom really has been reached. HP Discover in Frankfurt did seem to be a success, so the stock jumped strongly. Clearly should have exited several days earlier when the candles were inside the bollinger band. That would have been  5% in 5 days, but I was thinking more along the lines of a long term trade.  After the sharp decline on 12/16, I the stock was turning around and about to dive again, so I opted for small profit rather than turn a nice rally into a loser.   Turned out the returns on this trade were juiced by the dividend paid on 1/3, giving an actual 2.9% profit in 5 days, which is not bad.  The ideal technical entry would have been between 11/16 and 12/3, where the candles are within the green and pink EMA lines.

Trade 2: This trade is still open. Again, not my best entry technically, should have waited a few more days of consolidation. Turns out this second rally is more solid, and currently at 6.7% in 14 days.

Disclaimer: I'm an HP employee, and that helps approximately zip with trying to figure out what how many billions my employer will write off next, and where the stock is going!

Cleaning up miscalculated entry point on HPQ

Exiting this HPQ trade as the entry point was miscalculated as the bad news about HP just kept on coming.

My other entry point was much better...

This trade had a profit 3.4% including the dividend.