Birchtree's Account Talk

[Birchtree]

Re: Birchtree's account talk

The mid cycle slow down periods of the mid 1980's and mid 1990's were accompanied by relatively meaningful expansions in stock prices. Look at the angle of ascent longer term of the NYAD - the more acute the angle, the more powerful the trend of money flow is. This market is screaming higher and nothing is going to stand in its way. This market has been growing stronger on fear. Granville stated in his 1976 book: When the Dow walks alone, watch out. It usually signals an important top or bottom. The Dow was walking alone until today - the NYA put in another new all-time high.

 

[Birchtree]

Re: Birchtree's account talk

I'm in no rush to do anything today even though my $19K gain on the week will get wiped out. So the Fed has taken away the punch bowl for now - so what, that may not be the final word. I've got my sticky pants on and I'm in the Barton Biggs camp of a future stampede. Afterall, consumer spending picked up to a 3 percent annual rate during the third quarter from 1.4% in the second quarter, a powerful stimulant since consumers fuel about two-thirds of national economic activity. Exports jumped at a 16.2%, more than double the second quarter's 7.5% - the strongest increase since the fourth quarter of 2003. The Fed may be underestimating the risks posed by the housing bust and credit crunch and will have to ease monetary policy again before long.

 

[Steadygain]

Re: Birchtree's account talk

That's what I love about you BIRCH - once you've made it to the TOP it really takes a lot to shake you up. You've done terrific over the years and days like today really make little to no difference over the long run.

You definately have the right attitude and I sincerely hope you get the 100K weekly gain in the near future.

 

[Birchtree]

Re: Birchtree's account talk

I firmly believe a $100K week is in my future some time this year. I'm really tempted to do some buying later today - but I'm in no hurry. I'll have to look and see who is getting the hammer - it's all opportunity frm my perspective.

From TWSJ by Greg Ip 11/1 Fed's Rate Cut Could B e Last For a While

"The bursting of the housing bubble and strains in parts of the credit markets are profoundly deflationary events, and the Fed's concerns about inflation seem out of place, Bank Credit Analyst, a financial research service. said.

Despite the rhetoric, the Fed's leadership probably isn't too worried about inflation. Officials believe the tendency of a lower dollar or higher energy prices to become embedded in underlying inflation has declined significantly in recent decades. Their principal source of inflation concern - the low level of spare capacity in the economy - has waned as the unemployment rate rises and the economy slows. Wage and benefit costs rose at a subdued rate in the third quarter, the Labor Department said yesterday. The economy is expected to slow sharply in the fourth quarter as high energy prices bite into consumer spending and housing construction tumbles further.

On the other hand, the Fed doesn't see the self-reinforcing dynamics that lead to recession, such as in 2001, when it had to cut rates repeatedly. Rather, it sees the economy sagging temporarily, as the pool of potential homeowners shrinks to match the tightened terms of credit and the inventory of unsold new homes is worked down, after which it expects growth will return to a normal rate".

http://www.online.wsj.com/public/us

I also niticed where the euro-zone inflation rose to a 2.6% annual rate in October, the highest level in over two years. Snort.

 

[Birchtree]

Re: Birchtree's account talk

Since so many seem to be worried about the 50% increase in oil prices for 2007 amid concern about what the Fed will do, let's take a look back in history. The sudden jump in oil prices in the 1970s came amid already high levels of inflation, and provoked quick and sizable interest-rate increases by central banks fearful of a run away wage-price spiral. Officials at the Fed and other central banks have studied those shocks closely, and many have concluded that the sky-high interest rates were the primary cause of the recessions that followed.

After the first crisis in 1973, the US federal funds rates peaked at 13% in May 1974, up from 5.75%. As the Iranian revolution unfolded some years later and oil prices soared again, the federal funds rate went from 6.5% at the start of 1978 to a peak of 20% in May 1981. Severe recessions ensued both times. This time, amid the lowest rates of inflation in decades, the Fed kept trimming its funds rate until it reached a 46 year low of 1% in June 2003. Another tightening cycle ensued and now they are dropping rates again with inflation contained in their comfort zone. Instead of oil prices driving monetary policy, policy may now be driving oil prices. One consequence of a strong economy is a rise in oil use and its price. There has yet to be a bleed through into the economy and the economy will slow and company profits will remain stable. I have to stay bullish while I wait for these temporary storms to pass. It's time to buy stocks again.

 

[Birchtree]

Re: Birchtree's account talk

Well I'd say that was definitely a successful retest of the low of 10/19. Bull market corrections are always hard and fast.

 

[caymanbrac12]

Re: Birchtree's account talk

hey Birchtree which one would you get- the Ducati 1098 or the yellow Aston Martin or what the hell just get both?

 

[caymanbrac12]

Re: Birchtree's account talk

hey Birchtree which one would you get- the Ducati 1098 or the yellow Aston Martin or what the hell just get both?

actually they both will look good in the garage alongside the BMW M5.

 

[Birchtree]

Re: Birchtree's account talk

From the blowout yesterday taking a $48K hit to the ribs I'll soon be pedalling my old Firestone. I'm now down $29K on the week - on the comeback trail once again. This seems familiar for some reason.

Inflation appears to be contained, with the price index for consumer expenditures rising 1.7% after a 4.3% increase in the second quarter. The jobs report was outstanding at 166,000 - so the bears are always emotional. Core prices rose 1.8%. Additionally, employment costs for wages and benefits decelerated during the quarter. The Fed thinks the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction - I comtinue to look for a 3% GDP in the fourth quarter. If for some reason the best is behind us this would question the idea of a larger 3rd wave in progress. Unless this is just part of a second wave phenomenon within this still larger Primary structure. Bull market corrections are always hard and fast. During the last correction I purchased a few housing stocks - now may be the time to sniff out a few banks. There is always room enough for a few more wall flowers.

 

[caymanbrac12]

Re: Birchtree's account talk

I thought for sure you would appreciate an Aston and the Duc but hey to each his own. The old man loved cars (wht00ss) and had one hell of a garage and once tha car fever is in your blood you are hooked. Only problem is it is an expensive habit.

Greg

 

[Birchtree]

Re: Birchtree's account talk

On a personal note I would like to say that aside from some angst between myself and a certain moderator, I believe we have a well seasoned group of members on this board. It's not crowded and I find the information that is posted to be wisely informative. Many heads are always better than one - that's why I remain actively involved. Traders will be traders and investors will be investors and sometimes traders become investors and investors become traders - this economy and market are wide open to immense potential. I'm getting excited about a turnaround today - that emotion I can't control. I'm still looking for a Dow of 15,900 by the end of the year - now get that bear off my front porch, please.

 

[Minnow]

Re: Birchtree's account talk

retiring for half the year in or near the Blue Ridge Mountains, you will have to learn to put up with bears on your porch my friend.

 

[Birchtree]

Re: Birchtree's account talk

Caymanbrac 12,

My wife forced me to give away my 1976 Triumph TR-7 which was a joy to drive. I was the original owner and decided to keep it for my daughter while she was in High School. But she ultimately refused to even sit in it afraid one of her friends would see her. Eventually it went to the wife of a friend who said it was love at first sight - so the TR-7 lives on to provide more joy. With a new interior and paint job on a new set of shoes - she makes me proud. I still wish I had my 1954 Mercury that I drove in High School.

During times of volatility and turbulence in the markets the Ducati 1098 can really take the curves. We like to ride the cycles.

 

[hessian]

Re: Birchtree's account talk

Hi Birch,
Just killin' time (waiting on markets) - your post brought back fond memories. Ah, those high-shool days. I think part of us still live there, even now.
2 friends of mine each had TR6s ,
another a Midget,
another a Healy (the bug-eye?),
I had a '69 Healy 3000 MkIII -modified. Bored to the largest piston, 3/4 racing cam, modified dual exhaust, overdrive, and had Cragar mags on the rear, a nice gunmetal/dark grey.

My 1st love (well, maybe 2nd) - anyway, its days ended with my wrapping it around a tree).
But I still can picture it parked in my garage - I'm sure you know what I mean.

 

[nnuut]

Re: Birchtree's account talk

A friend of mine had a Healy 3000 during the same time period. He slammed a pumped up Chevy 283 in that thing, it was scary!!!
Oh, the front end looked like a box!!

 

[Birchtree]

Re: Birchtree's account talk

That would be like driving a '68 Sunbeam Tiger. I drove a 1969 TR-6 for seven years - ended up selling it to a british girl that was an employee - gave it to her for $300.

 

[nnuut]

Re: Birchtree's account talk

$300 bucks!!! She had to be a pretty one,------the CAR not the girl!!:laugh:

 

[Birchtree]

Re: Birchtree's account talk

I went on vacation one year to Rangley Lakes, Maine and encountered a him and her set of TR-6s that were just cruising the North Country during August. What a great way to travel. You could tell those machines slept in during the winter. Mine enjoyed the snow and the cold weather - they came with great heaters. I knocked out the head lights twice by watching the girls in the rear view mirror. I was a slow learner.

 

[hessian]

Re: Birchtree's account talk

Pretty cool, we all must be late Baby Boomer generation.
I also had experience of punching out a headlight one time. Stopped at a light, in a right turn lane at an intersection - a coule of hottie's in a car ahead waved, instinctively I popped the cluch thinking the light had turned green, but the right signal hadn't yet turned. The girls laughed and drove off.
I think they were all true girl magnates. Mine looked all stock (except for the dual exhausts and Cragars), but man when I stopped it - it was LOUD (dual glasspacks), and FAST! I heard the guy I bought it from actually ran it at the drags - and turned good numbers.
VR

 

[Birchtree]

Re: Birchtree's account talk

I keep thinking about the fact that Fed officials believe the tendency of a lower dollar or higher energy prices to become embedded in underlying inflation has declined significantly in recent decades. This has got to be a Goldilocks economic environment. The smell of superlative bull manure will be wafting on Wall Street soon enough perhaps again next week. Snort.