Birchtree's Account Talk

[Remo]

Re: Birchtree's account talk

"Liquidity inflow levels are an important gauge as to whether or not the stock market is in a corrective mode or a rally mode. When inflowing Liquidity is in Contraction, there is little money flowing into stocks, so the stock market pulls back or goes into correction." Take a peek into the future.

http://www.safehaven.com/article-8465.htm

Is Liquidity an economic health indicator? And is it Sector dependent? Seems too simple.... just trying to wrap what's left of my brain around it. Liquidity, on the surface, seems logical... I want to believe.

 

[Birchtree]

Re: Birchtree's account talk

The anticipation from the last two months was that liquidity had stalled and therefore no other M&A or private equity deals would be done - not true. Anyone involved in the stock market has access to immediate liquidity - all listed companies can buy other companies with their stock if so inclined. I thought the graph presented was worth a look - I find it encouraging for future stock growth.

 

[Minnow]

Re: Birchtree's account talk

So, is all this negativity that "wall of worry" that we see the markets climb to new heights???

 

[Birchtree]

Re: Birchtree's account talk

Yes: bull markets do not like company, the market will do everything it can to make the majority gun shy and keep the bears from recognizing the prevailing trend. Within Elliott, the "third of the third" is known as the Point of Recognition, the epicenter of an enormous advance. The A/D line is not diverting, and its very rare the price will top without A/D line divergence. Liquidity is the difference between what could be a "crash" and what is just an emotional reaction - August Dow of 12,500 was all emotion. Bull and bear markets in real estate are measured in years, not months. Sometimes they do ring a bell.

 

[Minnow]

Re: Birchtree's account talk

well, since you brought up real estate... think REITs will make a significant comeback now that the Ben did his thing?

 

[Birchtree]

Re: Birchtree's account talk

Certainly - most REIT investments are commercial. The business environment is poised to look even better - growth will markedly improve. Watch for the euro-zone investors to be on the bargain hunt.

 

[Minnow]

Re: Birchtree's account talk

And aren't most REITs in fixed rate mortgages anyway??? All that doom and gloom around the real estate market has turned these things into real bargains -- wouldn't you say?? I had some a few years back and loved 'em. Got a house (in part thanks to profit taking from the REITs), family and kids since then but man am i considering buying back in -- in a very immediate way... thoughts????

 

[Birchtree]

Re: Birchtree's account talk

Has anyone considered that the interest rate on the G fund will be dropping and the payout time will consequently be extended? Rates move in both directions. Boy, would I ever like to see Dow 13,900 on the close.

 

[ATCJeff]

Re: Birchtree's account talk

Has anyone considered that the interest rate on the G fund will be dropping and the payout time will consequently be extended? Rates move in both directions. Boy, would I ever like to see Dow 13,900 on the close.

Yes. No change until the end of the month. Were still at 4.5% until then.

Not going to get your 13,900 today. Probably next week. Starting to think we may see new highs by the end of the month.

 

[Birchtree]

Re: Birchtree's account talk

Were're going to be looking at yield scarcity again. This last half hour might be volatile and worth +100 more to the upside.

 

[Tempest]

Re: Birchtree's account talk

I'm just one good day away from making up what I lost in TSP when that buying opportunity presented itself in late July and August.

As always; in equities 100%

 

[Birchtree]

Re: Birchtree's account talk

Tempest,

I hope it hurt so good - the C fund $16.00 price is now gone forever. These were my DCAing prices post July peak: 17.14, 16.02, 16.19, 16.51, 16.64. I wouldn't mind one more hit in the $16.00 range but I'm ready for the next level. The only problem with making progress is that it will cost new TSP members more money for fewer shares - that's unfortunate but one can't hold back a bull market that's showing momentum.

 

[Birchtree]

Re: Birchtree's account talk

Frankly I think Tony should kidnap Amandink and hold him hidden until Iran gives back the retired FBI agent they're holding. I mean what would they do besides squirm. We could introduce him to Viggio.

 

[Birchtree]

Re: Birchtree's account talk

Feredinand woke me this morning (silly bull) with his nose up againt the glass humming a song - Benny and the Jets. We made $13K yesterday for a two day gain of $3K and a four day gain of $71K - happy, happy. I noticed that the XAX (AMEX Composite) INDX is at 2382.02 and is only a key stroke away from another all time high. That makes me feel better. There was evidence prior to the mid-summer 2007 price decline that once the health restoring correction was completed, the Dow and other indices would resume their upward climb to new highs. Internals have led prices higher time and time again over the years, and I fully expect this pattern to hold in the current market climate. Not only look for new price highs in the coming week/months, but much higher price highs. The shorts are getting killed, and the longs are not long enough - just the way Ferdinand likes to be pleased. But the point of recognition of the epicenter is close around the corner and a Dow 15,600 will only be a resting point. Providing of course the MCOs and MCSUMs respond accordingly. The NYSE ratio-adjusted A/D line successfuly retested its 1959 support line and is now coiled to spring with an angle of ascent that my give some neck strain looking up. Sounds ludicrous, right? My money is where my mouth is and I will participate. The Dow AD MCSUM achieved its highest level since at least 1989 in May 2007, certainly qualifying as a long term thrust. I hope the housing problems last well into 2008 - we don't need those folks in the market - yet anyway. I can give you another 120 reasons why the mega trend secular bull market is about to regain control of the rampage. But I'm trying not to be egregiously offensive. The commercials also know something big is coming, and holding longs through a 10% hit to the SPX will be but a blip in the longer term scheme of things. Snort.

 

[FUTURESTRADER]

Re: Birchtree's account talk

Tempest,

I hope it hurt so good - the C fund $16.00 price is now gone forever. .

thats only -6.5% away, I'd bet your money, but not mine

 

[Bullitt]

Re: Birchtree's account talk

The shorts are getting killed, and the longs are not long enough...and holding longs through a 10% hit to the SPX will be but a blip in the longer term scheme of things.

The best part about shorts being killed is that for the most part they were Hedge Funds. Maybe another one is going down because they tried to make an all or nothing bet on the Fed. Anyone retail investor fighting the trend... I do not feel bad for. Don't stand on the tracks when the train is coming.

Think of all the Sixpack Joes just realizing that the market (which has been in rally mode since late August) is trending upwards. They should add another nice wave of panic buying as we get closer to the Dow 14K 'Welcome Back Party'.

 

[Birchtree]

Re: Birchtree's account talk

Wild thing, I think you move me, but I wanna know for sure...
"Segmenting the data by valuation quickly highlights the role that cheap markets play in affecting stock market returns. During periods where the S&P 500 price to peak earnings multiple was less than 15, an initial rate cut was followed by annualized S&P 500 returns of 43.2% over 6 months, 26.1% over 12 months. Steep yield curves (long term yields substantially above short term yields) like today usually imply expectations for faster economic growth. The bounce-back in the financial markets is probably going to be smaller than it was in 1998 when the DJIA surged 20% from its close on Oct. 1 through the end of the year. In 1998, the Fed cut rates three times before it was comfortable that it could stop. Then-Chairman Alan Greenspan signaled the first rate cut in advance, in a speech, and markets rose on the signal. The actual rate cut, howerver, disappointed some investors because it was only one-quarter point. The Fed cut rates twice more, by one-quarter point each time, including one cut made in between its regular policy meetings. During the first half of this year, overall inflation, including food and energy, was running at an annualized rate of 2.5% down from 3.2% in 2006."

http://www.hussman.net/rsi/fedfundscut.htm

 

[Birchtree]

Re: Birchtree's account talk

Some economic textbooks will tell you to fear inflation if the dollar weakens. But I'm not seeing signs of inflation in import prices at 1.7% because global competition is holding these prices down. I fear the weak Donkey not the weak dollar. The weak Donkey will do much more damage to the economy. I still think we are in a disinflationary environment, where inflation numbers will continue to come down. The chances are, when the crisis passes, the Fed will take these rate cuts back, as they have in the past. Let me see - 13,000 x .20 =2,600. 13,000 +2,600 =Dow 15,600 by the end of the year. Still looking for another 30 to 1 up down volume ratio before the end of October. This quarter the S&P 500 stock index earnings are forecast to rise only about 4% - but next quarter analysts expect a profit increase of almost 11% and for next year, the expectation is 11.8%. I know the manure is getting deep around my hoofs but I can't help myself - it's a natural process staying creative and optimistic. Snort.

 

[Birchtree]

Re: Birchtree's account talk

"I don't know about other investors, but the message hasn't been lost on me." Band continued. "This latest Fed move, and the market reaction to it, are almost a carbon copy of what happened at the end of the 1998 Asia/Russia/Long-Term Capital Management crisis. Back then, Fed funds dropped from 5.5% to 4.75%. Then as now, the stock market exploded with a daily gain (October 9, 1998) very much like today's. And the S&P 500 went on to skyrocket 39% over the next 12 months." 1519 x .39 = 592 1519 + 592 = 2111. Man I'll be toast if that happens.

http://www.marketwatch.com Mark Hulbert "Partying like it was 1998" 9/24

 

[Birchtree]

Re: Birchtree's account talk

"Going Shopping? Buy Food Stocks. In relative terms, higher food stocks are overdue, and should receive a boost if analysts are forced to raise earnings forecasts."

http://www.bankcreditanalyst.com