Birchtree's Account Talk

[Stoplight]

Re: Birchtree's account talk

Stoplight,

The easiest way to play DCA with IFTs is to peel off a small percentage into the G fund as the market rallies - that is difficult to do because you sacrifice profit potential on the way up. But you end up with cash to take opportunity of days like today. Many strategies will have to change due to the newer restrictions that are evolving. I will be retiring this coming spring and all my time will be concentrated on running money. No bear market on the horizon until the 4 year cycle nests in October, 2010.

"Peel off a small percentage" sounds right...."Buy low, sell high" !

But 2% or 3 % IS a "small percentage" already (at least, in my way of thinking ), even though in my account, it doesn't add up to the $$$ that you have @ 2-3 % ! I neglected my account way too long

And....in this market, who knows if we're in a "rally" or not !

I guess I need to decide, based on my personal comfort level, where a DCA strategy ends, and an "all in" strategy begins Factor in the proposed new rules, and things get REALLY complicated (for me !)

Thanks again for your input....I'll move my indecisions into a new thread so as to not hog your "Talk" or your bandwidth....

Stop....

 

[TRAFFIC_DOG]

Re: Birchtree's account talk

Stoplight,

The easiest way to play DCA with IFTs is to peel off a small percentage into the G fund as the market rallies - that is difficult to do because you sacrifice profit potential on the way up. But you end up with cash to take opportunity of days like today.

This is exactly what I do.

With all due respect it is also contrary to your other 2,000 plus posts about "be right, sit tight", "enjoy the pain"... bla bla bla......

I'm sure you don't care, but I give you 5 stars for that post!

 

[Reactive1]

Re: Birchtree's account talk

fedgolpher,

The DJIA has to break and close below 12,845.78. A violation of one average, unconfirmed by the other, would not constitute a bear market signal. Both averages (DJIA and DJTA) must decline and break their August 16 lows. The DJTA has done that by dropping and closing below 4672.35. A violation of one average, while the other average stubbornly refuses to follow, could represent a bullish non-confirmation.

So did this happen today? Bear signal? Not sure I understand.

 

[Birchtree]

Re: Birchtree's account talk

Yes we have a Dow Theory sell signal. The DJIA closed at 12,799.04 which was below the 12,845.78 mark. The indicator to watch now is the Dow Utilities - they should provide support. The Dow Transports will begin to climb followed by the Dow Industrials. All a bull such as myself can do now is be right long term and sit tight. I'm not going to cut and run because the bears want to create panic for no reason. The 80 week moving average on the S&P - currently perched near 1415, would basically put the index even for the year - it looks like this trend line will be paid a visit. The S&P closed at 1416.77 and the previous bottom was 1407.59.

 

[Steadygain]

Re: Birchtree's account talk

Birchtree,
When we were driving through NH many years ago I remember the beautiful birch trees and to this day that is one of my favorite memories. Since I was able to lay in bed this morning and just reflect on things I thought about you and this MB. Now here's the way I see it. You, Uptrend, and me are all brothers - but obviously you are our bigger brother. I think you should change your name to Oak tree - because the Oak tree is majastic and unmovable. It is solid and unwavering and that much more represents you. Now I understand your view on the number of shares and technically you haven't lost anything because you have only accumulated more shares as time goes on. You need to understand as your little kid brothers that Uptrend and I have a different view - and that is the dollar value. To us $500,000 (for instance) is an amount we have come to appreciate. Now if that amount was achieved when the shares were $18 dollars a piece doesn't really make that much difference to us because if the share value drops to $9 dollars we will only have a net value of $250,000. We're just kids, and not seasoned like the mighty oak tree - so there is no way we would ever let that happen. For us the total value is the bottom line and having $500,000 in G Fund maintains the overall integrity of our retirement persuit. When the share value eventually drops to $9 - then the minimal $500,000 will gobble it up. Anyway for now our stategies are different, but in my heart of hearts I see you as our bigger brother (the unmovable - stong - and majestic Oak tree). It's like a big game to us and we are use to beating the enormous Market system. For a while we'll let this sysem know we can deal with whatever happens and laugh at our losses - but with the G Fund we always have the last laugh. Anyway - you have a much stronger stomach than either one of us and you should see if Tom can change you from Birch to Oak.

 

[Birchtree]

Re: Birchtree's account talk

Steadygain,

Thanks for the most generous suggestion but I'm happy with the Birchtree. The Birchtree is my roots back to New Hampshire. My turn will come in the G fund but not yet. I've got six more months left to DCA and then I pull out the pistols. It'll be fun. My oceanic account just toasted me to the tune of $183K and that is not fun, but I have enough buffer to take more pain. We are very close to our bottom and the next ride up should be glorious. Be right and sit tight. I can't wait to see how low my dividends have been reinvested - that's the golden key just like DCAing is the redeemer of my tugboat account - not to worry, the world hasn't ended yet and this mega trend secular bull market is not done yet either. Talk with you later.

 

[robo]

Re: Birchtree's account talk

Birchtree,

Henry is very close to going netural and maybe long. Read his comments about the latest Dow Theory sell signal.

Happy Turkey Day!

Robo

 

[Birchtree]

Re: Birchtree's account talk

Ferdinand, our buddy fedgolpher has declared you dead. He's wondering what else could drive stocks higher? Should we tell him the primary candidate is a more lenient Fedseral Reserve. Besides, most bull markets put in a serious fake to the downside before they finally exhaust themselves. We have set the stage for a real blowoff into 2008. The first thing an investor has to do is realize that when the news gets so good, that it can't get much better, that is the time to lookout, to be careful. There apparently is very little good news. Major market bottoms are slways surrounded by enormous amounts of bad news, and yet that is the right time to be buying. You have to be willing to buy in the face of bad news.

There was a sixteen year secular Bear market from 1966 - 1982. There was a secular Bull market from 1982 - 2000. I believe there was a cyclical bear market from 2000-2003. And IMHO another secular Bull market started in 2003 - until ?. There has never been back to back secular Bull markets. Some actually think we are in a secular Bear market. The choice is yours.

You cannot time the market off of fundamental information, because the stock market operates off of expectations as to what is going to happen six months or nine months down the road. In other words, investors don't buy stocks because of what they know today. They buy because of what they think they are going to know six months or nine months from now. So the market is always ahead of the economy. And as a result, if you are trying to look at fundamental information, you are always too late. It's like you should be buying stocks before any recession ends.

 

[Birchtree]

Re: Birchtree's account talk

There is an extremely repetitive pattern that occurs at major market tops, and that pattern is one of selectivity. In a typical major market bottom, you see a series of 90% downside days, 90% of all volume, 90% of all price changes are on the downside. The dominate emotion is fear and panic. During the 1973 and 1974 bear market, there were 15 90% downside days.

As you get into later stages of a bull market, individual stocks tend to peak out and begin to drop into their own individual bear markets, while there are still a loy of stocks continuing to advance. Of the 14 major market tops, between 1929 and 2000, inclusive, ehen the DJIA reached its absolute peak, the average percentage of stocks also making new highs on that day wsas 5.98%. A market top is a process - a market bottom is a pin point.

I have no idea at this time what fourth-quarter profits of the S&P 500 companies will be. The anticipation is they will rise only 2%. In early October the expectation was for a gain of 11.5%. Bear markets happen when stocks drop 20%. They'd need to fall much further to officially put Ferdinand to rest. Stocks have posted declines of nearly 10% several times in the past few years, only to rebound. Be right and sit tight. Now the Transportation average has fallen 20% since hitting an all time closing high July 19th.

 

[Birchtree]

Re: Birchtree's account talk

I've mentioned this before and from a longer term perspective could use a review. The midcycle slowdown periods of the mid 1980s and mid 1990s were accompanied by relatively meaningful expansions in stock prices. After all consumer spending picked up to a 3 percent annual rate during the third quarter from 1.4 percent in the second quarter. I suspect we'll see another 3 percent gain for the fourth quarter.

Richard Russell of Dow Theory fame is saying that continued non-confirmation by the S&P 500 and the Dow Jones Wilshire 5000 might mean the bear could be brief. He took forever to turn bullish and eventually turned when all three Averages set new all-time highs simultaneously this past summer. If you cut and run everytime there is a sharp sell off you spin your wheels. Since 2003 there have been 4 pull backs with the S&P 500 losing in excess of 7.5% from top to bottom using intraday numbers. On all of these previous pullbacks, investors became nervous and many sold out at or near the lows. The Birchtree has always been a buyer. On each and every occasion, the S&P went on to record bull market highs. I firmly believe the same thing will happen this time - perhaps pronto.

 

[Birchtree]

Re: Birchtree's account talk

How about a little more bad news for fun.
From TWSJ by Ruth Simon, Rising Rates to Worsen Subprime Mess - 11/24

"The number of borrowers facing higher payments isn't growing merely because the amount of loans with resets is higher. Another factor is that those with a looming reset now have a tougher time sidestepping it by refinancing or selling their home. Falling home prices mean that many borrowers have little or no equity in their home, making it tougher for them to get out from under their loans.

The projected supply of foreclosed homes is equal to about 45% of existing home sales and could add four months to the supply of existing homes. This is a fundamental shift in the housing supply which indecates that home prices will drop further as lenders mark to market repossessed homes. Foreclosed homes typically sell at a discount of 20% to 25% compared to the sale of an owner-occupied home. The big concern is a vicious cycle in which foreclosures push down home prices, making it more difficult for borrowers to refinance and causing more defaults and foreclosures'. "
Real-estate agents, who look at prices for comparable homes, or comps, say the sale of bank-owned properties can have a big impact. One month the comps are showing one price and then a bank comes in and sells a property for $30,000 less. All of the sudden, that's the new comp. It hurts everyone in the neighborhood.

 

[Tempest]

Re: Birchtree's account talk

That's it! I'm buying gold.

 

[GGal]

Re: Birchtree's account talk

http://www.marketwatch.com/news/story/dow-theory-sell-signal-may/story.aspx?guid={8327785F-23A6-4179-AE03-7D3F2A4DC8FB}

Birch, will you comment on the Dow theory sell signal please?

Thx
GGAL

 

[Birchtree]

Re: Birchtree's account talk

Peaches,

Please see post #s 2236, 2242, 2248. Since it's usual and customary to see the internals bottom about 4 weeks out from the actual price lows of the 9 month cycle nesting, the objective from here would be to see the A/D line data start the construction process that would allow a platform to be built from which prices can build on this same foundational base. I'll be watching the McClellan Oscillator of the NYA as to whether an internal bottom is actually behind us or not to help in pinpointing the upcoming cycle low due in mid December. During those times of positive trends in money flow, one of the main objectives of the 9 month low is for the advance/decline line to challenge its' 1% Trend in an effort to test the strength of this same longer term uptrend.

 

[Birchtree]

Re: Birchtree's account talk

I've mentioned previously the NYSE ratio adjusted A/D line and the 1959 resistance area. This resistance was first penetrated in Jan. '07. We have now had the third snapback test of this resistance line. Both the NYSE RA A/D line and its 10% Trend have penetrated the 1% Trend (200 EMA) and should bounce off the 1959 resistance support line. The 5% Trend (39 day EMA) will be next to cross the 1% Trend - this will complete the internal sequence. We are testing the support structure with the pressure from the 9 month cycle low. I actually thought the nesting was early when we we down to the lows on August 16th - but apparently I was wrong. The A/D line should begin a snap back to or towards its 1% Trend - that's the next technical expectation. I don't think we'll break the 1959 support line in that it took 48 years to finally get up over it in Jan. '07. But who knows how many more times we may be forced to test it. I'm really more concerned about the next 4 year cycle due to nest in October 2010 - that train I don't plan to be in front of. Until then I'll continue to ride the Ducati during every cycle.

 

[fabijo]

Re: Birchtree's account talk

You cannot time the market off of fundamental information, because the stock market operates off of expectations as to what is going to happen six months or nine months down the road. In other words, investors don't buy stocks because of what they know today. They buy because of what they think they are going to know six months or nine months from now. So the market is always ahead of the economy. And as a result, if you are trying to look at fundamental information, you are always too late. It's like you should be buying stocks before any recession ends.

Very well put and something we should all try to remember in times like these.

 

[Birchtree]

Re: Birchtree's account talk

"In addition our smart money indicator is incredibly close to flashing a rather large positive divergence signal on the daily charts. If it does this it will be the first time in years it has done so and we will respond by advising all risk takers to seriously load up as the possibility of the Dow going to put in a new all time true high woould go up by a factor of 10."

http://www.safehaven.com/article-8886.htm

 

[Warrenlm]

Re: Birchtree's account talk

Please keep posting the rah rah! A lot of us are trying to keep snorting and searching for the news or future expectations that can turn the current malaise around.

the possibility of the Dow going to put in a new all time true high woould go up by a factor of 10

We're hoping it's not ten times nil.

 

[FUTURESTRADER]

Re: Birchtree's account talk

major indices now in 10% 'correction'....time to 'back up the truck', Birch?

 

[Birchtree]

Re: Birchtree's account talk

Major market bottoms are always surrounded by enormous amounts of bad news, and yet that is the right time to be buying. You have to be willing to buy in the face of bad news. My truck is already loaded up and I'm trying to get out of first gear. On all previous pullbacks, investors became extremely nervous and many sold out at or near the lows. On each and every occasion, the S&P went on to record bull market highs. Anticipation is that the Q3 will be revised up to 4.9%. The bears can sell - I'm going to hold and take the opportunity to reinvest my dividends. Got my last C fund purchase at $16.21 - how great is that. This market is going to be screaming higher with fewer participants and I firmly believe nothing is going to stand it its way. This market is growing stronger on fear. Most bull markets put in a serious fake to the downside beforew they finally exhaust themselves. We have set the stage for a real blowoff into 2008. I got the dime aand I got the time to wait. The NYSE 5% Trend (39 day EMA) probably went below its 1% Trend today. The market is allowing the 5% Trend to join the 10% Trend below the 1% Trend (200 day EMA) to complete the sequence of internal cyclical objectives. The 9 month is due to bottom 12/19.