Birchtree's Account Talk

[Birchtree]

Re: Birchtree's account talk

If I can gently pull down $18K on the close today I'll have my first $100K week - ever. I did however give back $241K in one week last fall. The key is to already have great positions sitting in the portfolio when the next bull move comes. In all cases the market rebounded in as nearly a dramatic fashion as it fell. Analysts are at their least bullish levels ever - only 36% of all ratings are currently buys. I don't want that to change until we are much higher. The economic climate is being transformed from bleak to bullish at one of the most rapid rates ever. There is massive liquidity waiting on the sidelines. The after burners are about to kick in. There are tons of undervalued stocks out there waiting. Start to pick at them now because the market tends to rocket up quickly at the beginning of a recovery. The recent rallies are showing the market is anticipating the economy will stabilize and possibly begin its recovery in a matter of months. The expectations are for a turnaround to come sooner, rather than later.

 

[Birchtree]

Re: Birchtree's account talk

Now that the Kress 12-year interim cycle has bottomed in late December, the market is now free of all intermediate term cycle constraints and should be able to commence a new cyclical bull market heading into 2009. Moreover, the important 10-year cycle is peaking in 2009 and should also support a recovery in the first half of the new year. This time, unlike 2008, the three nearest major Kress cycles (including the 6-year and the 10-year cycles) will be in harmony on the upside instead of at odds. And the 6-year cycle bias in 2009 will be up instead of down. You can try and fight mother nature but you will end up regretting that move. I remain very bullish and believe we are about to blast off higher, with a massive recovery move as the renegade rally continues to ignite the bulls. For every crisis there is a corresponding opportunity. The year's crisis has brought equity vales to opportunity levels for those with courage to rumble with the bear. Snort.

 

[Birchtree]

Re: Birchtree's account talk

There is good price movement today while 70% of traders still believe this is a rally in a bear market. Eventually, people will realize that by selling in a panic in recent months, they have missed out on the most powerful short-term rebound in many years. They'll start to over come their fear, and will jump aboard the bandwagon. This process will result in the VXO and VIX eventually moving back into the 20s. That'll be the time to take some profits off the table. But gosh I just really hate to sell my blooming flowers.

 

[Birchtree]

Re: Birchtree's account talk

Someone just gave me 61 positive reputation points - honestly who in their right mind would do such a thing. Could you please leave a calling card. Even the 9th Infantry used to leave a 9 of spades card behind so Mr. Cong would know who their friends were not.

 

[Corepuncher]

Re: Birchtree's account talk

That'll be the time to take some profits off the table. But gosh I just really hate to sell my blooming flowers.

I'll believe it when I see it :laugh:

 

[Birchtree]

Re: Birchtree's account talk

If the SPX gets to the 200 day moving average at 1062 that should get the VIX into the low 20s, I think. The herd will be moving in stride by then - just in time for the last and final retest of the bottom. That'll be the time to shake it out a little - but only for a short term correction. My end of year target is still 1700 for the SPX. I know throw water on me.

 

[Thunderhorse]

Re: Birchtree's account talk

Hey Birch - Is that you at the throttle?

http://www.youtube.com/watch?v=FY87_flBpFg&feature=related


Best wishes and have a good weekend!

 

[WorkFE]

Re: Birchtree's account talk

Not to many people watching it go by.

 

[Thunderhorse]

Re: Birchtree's account talk

True. Maybe most were gathered back at the station she departed.

 

[Steadygain]

Re: Birchtree's account talk

Birch,
I'm already 1 1/2 hours late but taking a quick break before I finish up.


Have a great weekend Birch and thanks for thinkn' of me with the Blue Hawaii


I've got to admit - what I thought was 'real life' with him - turned out to be pretty real with me over the long run.

I've had a great life Birch - no regrets at all

 

[Birchtree]

Re: Birchtree's account talk

The biggest surprise for the majority would be for a day to day advance in the face of all the gloom and doom. So far we've had two 9 to 1 updays to confirm the greatest bullish significance. Will this rally turn into a big V bottom with a parabolic move - could very well happen with most on the other side of the fence. The S&P dropped over 50 points 18 times in 2008 - it's now time for a couple of those 50 pointers on the upside. I also believe we had a Zweig momentum thrust the other day and that is an intermediate term buy signal. The 200 day moving average for the VIX is at 33 and is currently resting around 40. If we go to 33 we will have broken the back of the bear - watch for it. There are no sellers left to damage this rally run or they would have done it today. Come on Dow 9015 which is the January 6th high.

 

[Birchtree]

Re: Birchtree's account talk

It takes a lot of intestinal fortitude and patience to believe an upswing is ahead. The market always looks ahead and begins its next bull market while a recession is still underway and worsening, while public investors are at an extreme pessimism. I believe that many of my 321 stocks are poised for a resurgence. Dollar cost averaging in both my accounts has allowed me to leverage the market during this period of decline. The stock market is still the best long term investment strategy for a significant portion of one's assets and my asset base remains fully intact. Now is the time to position your portfolio for the upcoming rebound. Wait for definitive proof that it is underway, or that the economy has recovered, and you could miss out on some of the market's biggest gains. Since 1926, stocks have climbed an average of nearly 46% in the 12 months following a bear market trough. I think it makes quicker time this time around. The stage has been set for investment opportunities that will make anything I've seen over the last 30 years pale by comparison - and yes I'm serious. My hope is that the shere levels of fera driven by such volatility were so irrational on the downside that the subsequent upside will probably end up breaking a lot of records as well. The extreme volatility (VIX now at 40) is already abating, and after such a massive fear event (VIX at 89) a major rally to bleed off the fear is almost certain. Markets bottoming and rising in the face of bearish news are often the most profiutable ones. We are in the very early stages of a new multi-year bull market. Look for a very strong rebound (30 to 35%) over a short period of time, which will probably take the markets back to their 200-day moving averages - 9887 for the Dow and 1062 for the SPX. Does that sound reasonable - I hope not. We don't want many believers. Snort.

 

[Birchtree]

Re: Birchtree's account talk

Have you ever wondered how we got into this discombobulated mess in the first place? As in the 1920s, the current crisis started with a mania-housing appreciation. But manias always have a cause. If you investigate individually the manias that the market has so dubbed over the years, in every case, it was expansive monetary policy that generated the boom in an asset. Presently, the money supply is expanding around 20%. I think the nexy asset bubble will be in the S&P 500 type equities - that's my plan. That's why I'm in as deep as I can get without taking out a home equity loan. Remember, the financial markets will always behave in the manner which will benefit the minimum possible number of its participants.

 

[Birchtree]

Re: Birchtree's account talk

It's really quiet around here tonight since most of our members are toughing it out on the lily pad they have no incentive to get involved - is there still that much fear. In factoring in the 1974-73 recession, the Dow declined 45.1% in the 1073-74 bear market, the worst bear market since 1929-32 crash, and the next bull market began when fear and despair were at their most extreme. I should know - I was there starting my investing career if you can call it that. Money markets were just getting stated and yielding around 5% at that time. The slope of the current price decline from last week is unprecedented over the past 80+ years, challenged only by the final several months prior to the 1932 price lows. The parabolic move we recently experienced in the 30 year Treasury Bond is indicative of what the Dow has coming - can you believe that. It will be glorious.

 

[alevin]

Re: Birchtree's account talk

It's really quiet around here tonight since most of our members are toughing it out on the lily pad they have no incentive to get involved - is there still that much fear. In factoring in the 1974-73 recession, the Dow declined 45.1% in the 1073-74 bear market, the worst bear market since 1929-32 crash, and the next bull market began when fear and despair were at their most extreme. I should know - I was there starting my investing career if you can call it that. Money markets were just getting stated and yielding around 5% at that time. The slope of the current price decline from last week is unprecedented over the past 80+ years, challenged only by the final several months prior to the 1932 price lows. The parabolic move we recently experienced in the 30 year Treasury Bond is indicative of what the Dow has coming - can you believe that.

Poor Birch, lonesome tonight? I'll keep you company. Not fear exactly, no. More like doing research, study study study, every night. Letting the lilly pad bob quietly while I learn how to manage the new taxable brokerage account software and finish setting up a Roth account along with the taxable account. My risk-taker funds-roughly 3% of holdings in my TSP.

Here's what my studying turned up tonight...since you're talking about the DOW historic behavior.. Warning, don't tease the bears!

http://http://www.markethistory.com/subscribe/best_of/content.html/15551.html

chart below shows the Dow in terms of the price of gold, that is, how many ounces of gold will the value of the Dow Jones Industrial Average buy? The vertical white lines mark days when the Dow has seen a 5% one-day gain. You can see that, first of all, the Dow has a long way to go in terms of the real value versus gold to get to a level where it has found a bear market bottom in the past. Right now the Dow will buy 7.7 ounces of gold. The major epochal cycle bear markets of the past (1929-1932 and 1966-1982) have found a bottom when the Dow has been able to buy two ounces of gold.

This chart below shows the Dow in terms of the price of gold, that is, how many ounces of gold will the value of the Dow Jones Industrial Average buy? The vertical white lines mark days when the Dow has seen a 5% one-day gain. You can see that, first of all, the Dow has a long way to go in terms of the real value versus gold to get to a level where it has found a bear market bottom in the past. Right now the Dow will buy 7.7 ounces of gold. The major epochal cycle bear markets of the past (1929-1932 and 1966-1982) have found a bottom when the Dow has been able to buy two ounces of gold.

 

[fabijo]

Re: Birchtree's account talk

Here's a good article on panics and booms printed in 1902. It was a transcript of a speech given in 1897. The boom is coming, Birch. Let's hear it for intestinal fortitude. The article is on the first two pages of the newspaper:

http://www.loc.gov/chroniclingamerica/lccn/sn92070142/1902-01-04/ed-1/seq-1

Or you could get the pdf of the whole paper here:
http://fabsadventures.com/books/1902.01.04.Imperial.Press.and.Farmer.pp.01-12.pdf

Or just the text of the article here:
http://fabsadventures.com/books/transcript.panicsandbooms.txt

 

[steveg]

Re: Birchtree's account talk

If the SPX gets to the 200 day moving average at 1062 that should get the VIX into the low 20s, I think. The herd will be moving in stride by then - just in time for the last and final retest of the bottom. That'll be the time to shake it out a little - but only for a short term correction. My end of year target is still 1700 for the SPX. I know throw water on me.

Birch --

I'm sorry, but I simply cannot even FATHOM this possibility. Wasn't it like 23 years or something, after the depression, before we re-hit the pre-crash highs? You are saying we are going to go 10% OVER the pre-crash high on the S&P -- WITHIN THE NEXT NINE MONTHS???? Did we ever reach, let alone go 10% over, a pre-crash high, in ANY of the last major recessions, within 9 months of the bottom (assuming, of course, that 666 was indeed the bottom)?

I just have to ask -- what, aside from pure wishful thinking, could you be basing that prediction on?

Please, since I do realize that I'm indeed ignorant with respect to markets, please educate me...what could reasonably allow 1700 SPX to occur by the end of the year?

Steve

 

[350zCommTech]

Re: Birchtree's account talk

I just have to ask -- what, aside from pure wishful thinking, could you be basing that prediction on?

Please, since I do realize that I'm indeed ignorant with respect to markets, please educate me...what could reasonably allow 1700 SPX to occur by the end of the year?

Steve

Steve,

I love reading Birchtree's comments. He is a great tool. Even though he'll reference the "herd" from time to time, he is actually part of the "herd". He is my best contrarian indicator. So, when ever he comes out with such a call as SPX 1700, it's time to get out or go short.

Here's a good example: http://www.tsptalk.com/mb/showpost.php?p=198728&postcount=3252

How about something positive: the Dow is now 100 points above the 200 month simple moving average - 8528.23 to 8629.68. And as Sy would say: "The market always looks ahead and begins its next bull market while a recession is still underway and worsening, while (you) public investors are at an extreme pessimism." Maurice says: "Because no technical violations have yet transpired, I think the three white candlestick pattern, that lead this open revolt against the bears will continue to go on conquering, liberating price action to advance in what I call the renegade rally." Can you smell it? The inverse head and shoulders pattern measures 1708 points with an objective target of Dow 10,358.

The result: Thanks Birch!

View attachment 6044

 

[Corepuncher]

Re: Birchtree's account talk

..what could reasonably allow 1700 SPX to occur by the end of the year?

Steve

I can see a way. The government prints 10 trillion dollars and gives it to everyone with 0% interest. It comes roaring back into the stock market, but of course by the time the S&P hits 1700, the dollar is fricken worthless and we are wheeling around money in wheelbarrows just to go buy a loaf of bread.

 

[KevinD]

Re: Birchtree's account talk

Optimism bias