Birchtree's Account Talk

[Birchtree]

Re: Birchtree's account talk

"As of now, the SPX has retraced exactly .382 if its move from October 2002. If we are making a wave 5 down from 1576, we will go a little lower, but it would still be well within the confines of a normal correction for the bull market which started in 2002."

http://safehaven.com/article-9654.htm

 

[Birchtree]

Re: Birchtree's account talk

Well I can kiss the CO NYSE breadth MCO divergent lows of January good-by. The MCO is currently at -88.12 and my only hope is that we can hold the August '07 lows at -125 - if not I'll be burnt toast. The CO NYSE breadth MCSUM came in today at -305 and that was right where the support line connecting the November and January lows came in - if this support line can hold further then a bottom might be in for another attempt to rally. If the MCOs don't hold the -125 area this market may be very vulnerable to a longer term breakdown of trend. An emergency rate cut of both the Fed funds and the discount rate would be most welcome at this point - maybe the market will rejoyce over the Spitzer career killing move. I did shift a 2% position into the I fund at COB 3/11. My previous low prices for the I fund purchases were at $21.58 and $21.45.

 

[Heres14U]

Re: Birchtree's account talk

Folks, keep an eye on recent Dow lows at 11,635, which will tell us if major selling will be seen ahead. A big break through 11,600 could easily spark a drop of another 900 to 1,775 points, which represent the 50% and 62% Fibonacci Retracement levels from the Weekly Chart. While a modest bounce may be seen from current lows, much more weakness is likely so long as the Dow remains beneath 12,000. Two Dow levels to keep an eye on. It still remains to be seen if the Transports break down. In this market, with high fuel costs, I would say they will.

 

[Wolverine]

Re: Birchtree's account talk

Folks, keep an eye on recent Dow lows at 11,635, which will tell us if major selling will be seen ahead. A big break through 11,600 could easily spark a drop of another 900 to 1,775 points, which represent the 50% and 62% Fibonacci Retracement levels from the Weekly Chart. While a modest bounce may be seen from current lows, much more weakness is likely so long as the Dow remains beneath 12,000. Two Dow levels to keep an eye on. It still remains to be seen if the Transports break down. In this market, with high fuel costs, I would say they will.

I am still thinking a 50% retracement of both the Dow and S&P looking at the weekly charts. Near the 11000 for the Dow and Near the 1200 for the S&P. When? Don't know. Just some thoughts with all this mess going on currently and I still do not believe it is over with yet.

Anyhoo, just some thoughts with it all.

Thanks Again To All

 

[Birchtree]

Re: Birchtree's account talk

"According to Dow Theory, a bull market ends and a bear market begins at the point where both Averages, Industrials and Transports, record their last highs together. The last time both Averages recorded highs together was back on July 19, 2007. On that day the Dow closed at 14000.41 and the Transports closed at 5446.49. However, the Dow continued higher, closing at a record high of 14164.53 on October 9, 2007 - but July 19, 2007 remained the high for the Transports.

Therefore, according to Dow Theory, July 19, 2007 marks the end of the bull market and the beginning of the current bear market. (His words, not mine by the way). On that basis, the primary bear market is now eight months old. It would be unusual for the bear market to end after only eight months, but in this business anything can happen. Furthermore, as we saw during the 1966 to 1980 period, a bear market can be made up of a number of small bull and bear market cycles - all taking place within the structure of one extended secular bear market.

Steve Leuthold does research for Weeden Leuthold. Steve does a prodigious amount of research and has been doing it for a long time. In his latest report, Steve opines that the recession started in November 2007. He notes that since WW II recessions have tended to become shallower and shorter with the median length about eleven months. If this recession holds true to form, this recession should end around October of 2008. Since the stock market typically hits bottom around the middle of a recession, then working backwards Steve thinks that the stock market could hit bottom around April or May. But if this is fated to be the BIG recession, say a sixteen month recession, then the stock market should hit bottom about nine months into the recession, which means a market bottom in the July-August 2008 period."

http://ww2.dowtheoryletters.com

 

[Birchtree]

Re: Birchtree's account talk

The other day I posted an article by bearish Robert McHugh on a gloom and doom alarmist thread - if you are a member that does not frequent that thread you may have missed a funny read, so here it is again for your entertainment. As a word of caution please use the bathroom first to avoid any uncanny accidents.

http://safehaven.com/article-9651.htm

 

[Steadygain]

Re: Birchtree's account talk

Therefore, according to Dow Theory, July 19, 2007 marks the end of the bull market and the beginning of the current bear market. (His words, not mine by the way). On that basis, the primary bear market is now eight months old. It would be unusual for the bear market to end after only eight months, but in this business anything can happen -

Birch - I fully agree with this.

which means a market bottom in the July-August 2008 period."
/quote]

My guess is the FED has been forced into most of the "bail outs" and "the cuts". If Ben was able to act in his own accord - WE WOULD HAVE HIT THE BOTTOM ALREADY - But all this crap just prolongs the agony.

It's hard to see this going beyond 7/08 - but time will tell.

 

[Bullitt]

Re: Birchtree's account talk

Robert McHugh on a gloom and doom alarmist thread

Hey Birch I read that article. I always find it funny how these technicians feel a chart will not only convince themselves, but all those who listen, of their dreadful thesis.

1. He's got an 18 year head and shoulders pattern on the USD which he shows to be bearish (and I'm sure he sold right around 2002).
2. He's got a six year chart on gold which is overbought but apparently is bullish and screaming buy.
3. A six year chart of silver which also appears overbought at first sight, but in his opinion is a screaming buy as well.

Shoot, the news has already scared the retail investor into selling at the lows in equities and buying into the tops of commodities. Now they're trying to tell us that 1 part per trillion of our drinking water contains pharmaceutical drugs!

If that was the only article out there on the market, we'd probably all be digging bunkers in our back yards in preparation for the crash.

 

[Barney]

Re: Birchtree's account talk

Barney,

You just made my day with a nice giggle. Do you think we can close up over 400 points today - we got an hour left to go at 341.

Birch, I am still to green to make an educated guess. But if I WAG it, I say +350-360.

12,156.81
+416.66 (3.55%)
Mar 11 - Close

Good job Birch, I guess I have a lot more to learn.

 

[Corepuncher]

Re: Birchtree's account talk

12,156.81
+416.66 (3.55%)
Mar 11 - Close

Good job Birch, I guess I have a lot more to learn.

This is a momentum shifting move, IMO. Biggest up volume day since the last reversal back in Jan...when we then proceeded to rise another 4-5% before making a lower high.

 

[Steadygain]

Re: Birchtree's account talk

Wanted to be the first - but will be the first of many.


EXCELLENT JOB BIRCH!!! - and will likely get a sizeable gain tomorrow as well.

Too bad we can't freeze days like these - go out and have a long celebration and after everyone's content let things resume.

 

[caymanbrac12]

Re: Birchtree's account talk

Wanted to be the first - but will be the first of many.


EXCELLENT JOB BIRCH!!! - and will likely get a sizeable gain tomorrow as well.

Too bad we can't freeze days like these - go out and have a long celebration and after everyone's content let things resume.

same here Birchtree. Just got through reading the charge of the Light Brigade and By God I'm feeling that blood rushing.

 

[poolman]

Re: Birchtree's account talk

same here Birchtree. Just got through reading the charge of the Light Brigade and By God I'm feeling that blood rushing.

Same from me Birtchtree. You stubborn Mule.

Have a good evening.

 

[caymanbrac12]

Re: Birchtree's account talk

Same from me Birtchtree. You stubborn Mule.

Have a good evening.

Same from me Birtchtree. You stubborn Mule.

Have a good evening. quote

Please tell me you Know I'm kidding


Craig

 

[Birchtree]

Re: Birchtree's account talk

I've been patiently waiting for a 400 point day since the first bottom in July '02 - the very next day was a small sideways pause to refresh and then came another 400 point move. I'm not saying it's going to happen again but sometimes history does repeat. The battle of all battles may be about to take place - the safety of the G and F funds will provide an excellent view as to how things transpire. In the bear market of 2000-02 there were five separate rallies of 10% or higher, and during each one, investors thought a recovery was in sight. But the companies had no earnings - this correction is different. Earnings outside financials are running around 12% to 14%. If this is the start of a two day reversal formation it could lead to a "V" wave up to SPX 1600-1700. This is the 1998 scenario.

 

[robo]

Re: Birchtree's account talk

The other day I posted an article by bearish Robert McHugh on a gloom and doom alarmist thread - if you are a member that does not frequent that thread you may have missed a funny read, so here it is again for your entertainment. As a word of caution please use the bathroom first to avoid any uncanny accidents.

http://safehaven.com/article-9651.htm

Based on subsequent stock market performance and our judgments about his forecasts for overall stock market direction, Robert McHugh has been right 35% of the time, a poor accuracy rate. His forecast sample size is moderate, as is our confidence in this conclusion

http://www.cxoadvisory.com/gurus/McHugh/

 

[Birchtree]

Re: Birchtree's account talk

"The sentiment couldn't be any more bearish right now. Everyone is talking about recession and more financial turmoil as if it's inevitable. That by itself is an indication that the stock market has already priced the worst and an interim bottoming process is well underway."

http://safehaven.com/article-9674.htm

 

[Steadygain]

Re: Birchtree's account talk

"The sentiment couldn't be any more bearish right now. Everyone is talking about recession and more financial turmoil as if it's inevitable. That by itself is an indication that the stock market has already priced the worst and an interim bottoming process is well underway."

Amen brother - very well put. At least I interpret your message to say "a bottom is on the way"

 

[presskh]

Re: Birchtree's account talk

"The sentiment couldn't be any more bearish right now. Everyone is talking about recession and more financial turmoil as if it's inevitable. That by itself is an indication that the stock market has already priced the worst and an interim bottoming process is well underway."

http://safehaven.com/article-9674.htm

I agree with you about the market probably already pricing in the housing crisis and the fallout in the financial sector. However, I don't know that it has fully priced in elevated inflation and reduced corporate profits in other sectors due to people holding back on spending.

 

[Birchtree]

Re: Birchtree's account talk

Tuesday was a 90% up day. Up volume on the NYSE represented almost precisely 90% of the combinred up and down volume on the exchange. This could potentially be a key reversal with the stock market perhaps discounting the worst that can be seen ahead. According to Bob Brinker, "The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume. The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test."