Birchtree's Account Talk

[Birchtree]

Re: Birchtree's account talk

The oceanic has given back $27K in the last two days. Today may be an opportunity to get most of that back. I'm still watching the transports but I'm not really worried about the present underperformance. Since the bull market began in 10/9/02 the transports are up 143% while the industrials are up 92%. The same situation presented in August'06 and the Dow went up 11% without initial participation of the transports.

From the WSJ by Ian McDonald 10/17

"Should house prices fall by 10% over the next two years - an outcome analysts see as entirely possible - losses stand to be staggering. Thomas Zimmerman, head of mortgage credit research at UBS in New York, estimates that in such a scenario losses due to defaults could wipe out as much as 16% of the nearly $600 billion in subprime-backed securities issued in 2006. In August, such losses were equivalent to less than 1% of the total.

The jobs market also plays a key role. If the unemployment rate ticks upward by a precentage point or more, Mr. Zimmerman believes losses due to defaults could easily exceed 20% - enough to hit even some of the most highly rated securities." Anything to keep them out of stocks.

 

[Birchtree]

Re: Birchtree's account talk

The 9 month low is scheduled to nest around 12/19 in theory. Could the current correction be the impact of the 9 month cycle low coming in sooner than anticipated keeping a lid on things for a month or so? This would actually be bullish going forward. Also, the SPX breadth MCO has broken below its zero line along with both the 5% and 10% components. The 10% component is of a short term nature of the A/D trend (3/4 weeks). The 5% component is of an intermediate term nature (4/8 weeks). Because the 10% component has broken its zero line it will take more than a week to find balance again. If the 5% component doesn't see a bounce then we'll have more than a 4 week correctional process. I think the 9 month cyclical low is nesting early - this would be good news for the first and second quarters next year. Or this could simply be a mild give back - and the 9 month may come late.

 

[Steadygain]

Re: Birchtree's account talk

I think you're on target Birch - consolidation needed to proceed - and the next few months should still give at least an additional 5%. I'm still ahead of the game (4th Quarter) - but if the markets would consistently fall for 4 straight weeks I would bail out by the end of the 2nd week.

 

[Birchtree]

Re: Birchtree's account talk

The early 9 month may be very mild and we'd trade essentially side ways. Looks like we will get another interest rate cut on 10/31 - low inflation resulting from lower growth prospects keeps me in the C fund instead of S fund. I've paid to ride the train so I'm riding both directions. If I can get my next DCA above $17.13 but below $17.53 I'm a happy camper. The bears will not be in control for long - let'em have a few berries in the woods. Snort

 

[Uptrend]

Re: Birchtree's account talk

If I can get my next DCA above $17.13 but below $17.53 I'm a happy camper. /quote]

What does this statement mean? Are you referring to the C fund?

Also, don't you think the declining value of the $ has increased demand and orders from other countries for our products; especially in tech - from large cap and small cap alike? Looks like the S fund made a comeback and will surge today for example. Looks like to me that US will be doing strong international business for some time to come - and it may be the product more than the size of the comapny that will be the driver. So I am a little confused why you are ignoring the S fund.

 

[Birchtree]

Re: Birchtree's account talk

The S fund is pushing into eight year outperformance where the C fund has been out of favor just as long - it's time for a change. The prices mentioned refer to the last two C fund purchases I made with my contributions. With a slower growth scenario approaching I'll stick with the large caps - reminds me of the late 1990s potential.

 

[Bullitt]

Re: Birchtree's account talk

My exodus from S to C has already begun. I like to be early to the party and then slip out when nobody is looking.

 

[charmed855]

Re: Birchtree's account talk

The S fund is pushing into eight year outperformance where the C fund has been out of favor just as long - it's time for a change. The prices mentioned refer to the last two C fund purchases I made with my contributions. With a slower growth scenario approaching I'll stick with the large caps - reminds me of the late 1990s potential.

Not to worry. Another 15 years and a lot of these small caps will roll up into the S&P500. Time is our friend.

 

[Birchtree]

Re: Birchtree's account talk

"Skeptics of the ongoing bull-market may want to take note of the fact that today only 20% of China's exports go to the U.S. In other words, 80% of China's exports are shipped to other parts of the world. Therefore, the much anticipated slowdown in U.S. consumption may not throw the Chinese economy into a severe recession, thereby hurting the demand for commodities. Already, China has surpassed the U.S. as the world's second largest exporter and its exports have grown by 27% over the past year. At current growth rates, China is projected to overtake Germany as the world's biggest exporter in 2008." Imagine that.

http://www.financialsense.com/editorials/saxena/2007/1018.html

 

[Steadygain]

Re: Birchtree's account talk

You make some good points Birch. We are so accostomed to thinking of China as in "the Dark Ages". Most have no clue of how advanced they are and how quickly they're becoming the dominant power. China is now like the United States in it's former battle with Russia "to advance in outer space" - that was the ultimate battle and each side had to show the world who is really advanced and in control. This is exactly how China stands now - they are out to show everyone a reality that will shatter others' (Germany and USA) illusions.

 

[Birchtree]

Re: Birchtree's account talk

Garzarelli is staunchly bullish. She says her 14 indicators are positive at 75% and will go to 80% bullish when the Fed drops interest rates again. I just have to ride through this current foolisness on my Ducati once again. If this consolidation is the results of an early 9 month cycle nesting, it will be over soon enough. Be right and sit tight.

 

[Steadygain]

Re: Birchtree's account talk

No doubt - you are right on target. To jump into safety now in hopes of limiting losses would be the biggest mistake possible.

 

[Uptrend]

Re: Birchtree's account talk

Buys are developing today. Time to grab positions in the S, and perhaps your favorite C too!

 

[Birchtree]

Re: Birchtree's account talk

What happens if the G7 folks decide now is the time for dollar intervention? You know they want a stronger dollar and a concerted effort to buy dollars would attract some global attention and rally the markets. This feels like the 9 month cycle is early - do the damage now and let the Fed drop rates again. Maybe another 50 basis points instead of a measely 25 basis points. I've mentioned before that these retracements would be scary but the risk for me is getting out, not staying in. If it gets worse I'll dip into my stored spill money and do more selective buying. There is always a silver lining.

 

[Silverbird]

Re: Birchtree's account talk

Before the G7, the EU was busy harranging China about exchange rates as the low China rates hurt them more than the low US rates and the Chinese have their currency pretty much tied up with the dollar. The EU knows that the high debt and slowing U.S. economy points to a lower dollar. China, Japan, and the OPEC countries are quietly moving their dollar investments into other currencies (which is why I said the Chinese "pretty much" have their currency tied to the dollar - it's now a basket of currencies with the dollar prevading) or buying assets to try to do something about their lowering value dollar reserves.

At the G7 some economies may harrange the U.S. to do something about the dollar but I don't think there is going to be too much pushing. Didn't see any sign of any of the G7 powers complaining about Fed lowering interest rates even though that lowers the dollar - a slide doesn't make the other economies happy but no one wants a dive.

 

[Birchtree]

Re: Birchtree's account talk

I'm thinking if I can get a $24.00 price on the I fund going into the next bottom that might provide another opportunity to round trip again. Three times could be the charm. I need to increase my DCA percentages when I start nibbling. Right now my ribs are a little sore from doing the rope-a-dope. We are a long way from a serious retest of 12,500 - but I am making up my next buy list incase we don't turn anytime soon.

 

[Birchtree]

Re: Birchtree's account talk

"Can we be bullish in a slow growth environment." Of course, slower growth means a potential longer economic expansion with lower interest rates and lower inflation - Goldilocks is back. The stock prices and P/E ratios will take care of themselves with greater multiple expansions. Snort.

 

[Birchtree]

Re: Birchtree's account talk

I was just thinking this could be a typical week for my oceanic account. On the week so far I'm down $14K so add another $30K to that and I'm in a typical down week - nothing extraordinary from my perspective. It's all part and parcel of being an active investor. When the true epicenter of 3 of 3 kicks in it will be rocket time. I wish I could be bearish but it's just not in my gene pool at this particular time in the markets, beside my heroine Elaine is superbullish. So is Bobby and Don and Don are too, along with Mary and Richard. Hope I have many dividends this week buying at lower prices. Will I get another $16.00 range price on the C fund next week? I'm gushing.

 

[Birchtree]

Re: Birchtree's account talk

I revel in the move on the VIX today - 21.81 +3.31. It's a contrarians lip smacker.

 

[Birchtree]

Re: Birchtree's account talk

Unfortunately I'd probably be getting by light if I only gave back $30K - better make that closer to $45K and add the previous $14K to it. I'll be happy for anything under $50K loss on the week. When you are an investor you can expect to get hit with a blindside at anytime - part of doing business. A disaster like today is nothing but opportunity knocking in disguise. I'll simply remind myself that we are stll early into the third or speculative phase of a great bull market. The market is always trying its best to make the majority think opposite to what is truly important. Many who had believed that the market would top for several years now are now looking to participate in the uptrend - the market doesn't like this and it will do everything it can to keep these same folks from participating. The bottom line is that disaster hurts the majority but provides huge hidden opportunities for the astute investor. Is the "Cooler" responsible for this damage?