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Or you can now use TapaTalk again!Birchtree's Account Talk
- Thread starter Birchtree
- Start date
Birchtree
Well-known member
Re: Birchtree's account talk
"The violation of the head and shoulders neckline has proven to be a bear trap, and my opinion is that the rally from the March lows is resuming. My upside price target is about 1200 on the S&P 500."
http://[[[financialsense.com/editorials/swenlin/2009/0717.html
Birchtree
Well-known member
Re: Birchtree's account talk
The cumulative NYSE advance-decline line is breaking out. Many technicians have doubts about this rally because of the low volume - that's great because we need a dominance of doubt to prop up the wall of worry. I'm embarrassed by the amount of money I made this week - but I did earn it. And if next week provides a similar amount I'll be doubly embarrassed. But I'll handle it. I'm a believer in the technical principle of symmetry which suggests that the recovery will mirror the fall. SPX of 1300 may just be down the road. It would appear that the meltup is starting to kick into full gear. This rally certainly is shaping up to be extremely powerful and may be a harbinger for next week. If I get the chance to drop another $50K down the rabbit hole I'll regard myself as fortunate. It's imperative to be a buyer at the early stages of a bull market and I'm practicing what I preach.
Birchtree
Well-known member
Re: Birchtree's account talk
My buddy Ferdinand would like to take a moment to recognize the fine buy signal that was expressed by the Coppock Curve - indicating the onset of a new bull market. A move above 940 and especially a move above 1000 on the S&P would take the worst case extended bear market outcome off the table. As I've mentioned before the economic climate is being transformed from bleak to bullish at one of the most rapid rates ever. And with the massive liquidity waiting on the sidelines we all know what comes next unless you are blind - the after burners are about to kick in. For every crisis there is a corresponding opportunity. The year's crisis has brought equity values to opportunity levels for those with enough courage to rumble with the bear. So far the herd has been moving away from stocks as fast as possible - a classic maneuver. The herd has an alarming tendency to buy and sell at the worst possible times - this is a very good sign. And I remember the last time Jeremy Grantham was this optimistic was in the summer of 1982 and what a delightful ride that turned out to be. In 19 weeks I'm now ahead to the tune of $447K - might crack the $500K next week.
Birchtree
Well-known member
Re: Birchtree's account talk
There has been a great deal of attention and racket made over the initial jobless claims and how they continue to impact the economy. The simple fact of the matter remains that in this recession, we still haven't exceeded the number of claims in the 1981-82 recession. Why all the hoopla - as bad as it seems today, we've lived through worse, and not all that long ago. It was a lot worse in 1981-82, too, because the size of the work force was smaller then than it is today. The work force is 75% larger now since 1972. So the same number of claims represents a larger percentage. Adjusted for the size of the work force, today's claims are just a little more than half of what they were at the 1982 peak. I know most of you don't have any familiarity with the 1982 bull market but I sure do - it was a delicious ride and I think the current bull market will provide some real excitement but you have to be long. Watch for the buying stampede.
Birchtree
Well-known member
Re: Birchtree's account talk
Here is an idea as to what could happen in this new leg of the bull market. "In June 1932 market players saw illusory light at the end of the tunnel. In two months, the market rose almost vertically, climbing 110%. For four more months it held the gain and then, confronted with continued unrelieved bad news, sank steadily for six months so that one year after the rally began it was up only 35%. But this is the key: by then a year later - there really was light at the end of the tunnel and the market rose again, 130% in eight months. And this time it did not give it back."
http://www.marketoracle.co.uk/article10590.html
Birchtree
Well-known member
Re: Birchtree's account talk
I'm talking to myself today wondering where all the gloom and doom bears have gone - tucked that fury tail between their legs while on the run. I remember back on the November lows where we saw one of the greatest bull bear spreads of pessimism ever recorded and what does a renegade contrarian do in a situation like that - well at that moment in time if you couldn't go long you never could. I faithfully pumped big $K into the market with no regretts. Of course we had the beast known as emotion playing on the minds of the masses, and having the guts to go long wasn't easy. Even watching mom and pop get completely out of the market creating the March 6th low told me they were making the ever classic mistake they always make - therefore I had neither sympathy or empathy. And now they are being punished because they are going to be left behind. The lily padders in the top thirty are about to descend into the depths. There is nothing more gratifying than being a "Rider on the Rain".
Birchtree
Well-known member
Re: Birchtree's account talk
The cumulative NYSE advance-decline line is breaking out. We now have a breadth thrust initiation on the NYAD cumulative tops down trend line. And we have a bull divergence off the intermediate term support line both of the NYSE breadth MCO. The NYSE breadth MCSUM has given a buy signal. The SPX RSI is now back in bullish territory at 66.16. I look for a real crack in the VIX any day now. I'm simply drip feeding my money into the market on the way up - locking in the previous gains behind me. Of course I always face the possibility of a whipsaw. A typical 55% recovery points to a 10,000 Dow - a nice round number, but no cause for great celebration. However, a historical bottom like 1932, 1974, 1982 or 2009 implies a greater return. A reversion to the mean implies a market recovery on the order of 75% to 100% in two years. The correct strategy is to never miss the start of a new bull market.
Birchtree
Well-known member
Re: Birchtree's account talk
There was some good technical analysis posted by Coolhand this evening - but I will continue to follow my discipline of buying the rallies now that I am on margin. The higher the market goes the more I have available to buy. Historically speaking NY composite AD MCO postings near the +100 range have been followed by strong advances over the next year or two. There was a +96 weekly NY AD MCO posted in late spring 2003. And a +97 weekly AD MCO posted in January 2009. I'm going with history recognizing there will be corrections to try and shake the weak hands off the bull's back and stay long and strong. After declining to just 25% last week, the percentage of S&P 500 stocks trading above their 50-day moving averages has spiked to 67% this week.
Birchtree
Well-known member
Re: Birchtree's account talk
I took some time out today and did a little shopping around Lake Keowee in S.C. There are some beautiful homes and property available and very close to the Blue Ridge mountains.
In my opinion the bears now don't have much of a chance to take this market down and keep it down with a VIX reading this low - just over 24. The lower it drifts away from 30 and the longer it does so, the harder it's going to be for the bears to make the move down for the market. The VIX will eventually start to move even lower and the bears will have to endure more pain as the market goes higher, overbought and negative divergences aside.
alevin
Well-known member
Re: Birchtree's account talk
Morning Birch
. Question of the day.....I've been poking around looking at your recent laundry list. Given your investing philosophy (as I understand it), why would you be buying stocks that pay no dividends? Examples: AES, AGCO, BBG, BLT, BW, CMG, CML, CPX, DRC, ELN, EXH, EXM, FBM, and more......
Are you diversifying into future growth stocks? or you have so many to keep track of, these used to pay dividends and you didn't notice when they stopped? Inquiring minds want to know....
Birchtree
Well-known member
Re: Birchtree's account talk
Alevin,
Yes and yes. Some of my stocks have reduced or omitted their dividends but I invest for the future when most of that income will undoubtedly be restored. I've ventured into margin and when you play that game you get more buying power with capital appreciation. So at the start of a bull market the greater the asset base the more potential for the gains. There is no cap on my margin balance which means the more I make the more I can borrow to further invest. I'm using my current asset base as collateral. And every time we rally I'll be a buyer because I'll already have gains on previous purchases. I'm now deploying the leverage of other people's money and the interest I'm being charged is tax deductable against my dividend income. I'm still participating in dividend reinvestments. I figure it will take a 74% rise in the Dow to reach its peak hit in October 2007. That will be a lot of buying power to exercise. Unfortunately or perhaps fortunately this has been a rally on low volume which keeps the wall of worry intact. The lingering fear and pessimism from last year's abnormal market plunge put most investors in a state of (not me, not this time) that persists even now. That is actually beneficial to the bull market - come in much later please. Get me in at any price once again. These people are too frightened to take their capital out of zero-yielding safe haven investments and put that capital back to work where it is being most rewarded right now, namely equities. This is a classic mistake. I'm reminded that those few who made the painful decision to buy into the pullbacks or bottoms are appropriately rewarded - the financial markets always rally dramatically following any true bottom, so that those who panicked on the way down are punished rather than rewarded. That's the Birchtree synopsis and you just don't know how good I looked last year with my $1M haircut - keeping my asset base intact. Now the holy grail will have a chance to prove its' selfworth. I want another $100K week - Snort.
Uptrend
Well-known member
Re: Birchtree's account talk
Birch:
What are you basing this prediction upon? Lets look at the charts:
View attachment 6577
Here is the VIX weekly, and as you can see the VIX is in a bullish falling wedge pattern since last Nobember. We see a divergence on the MACD histogram bars developing since the first of the year, (as I have drawn in green) as well as a divergence on the RSI with a higher low that has formed in the last month. This pattern has not been violated and is a usual high reward to the upside. I have shown you my technical thinking, so now I challenge you to show me your thinking. Thanks!
Birchtree
Well-known member
Re: Birchtree's account talk
"Volume was quite strong and the advance decline line was quite powerful as well. Two necessary ingredients to confirm a gap up and run. If that gap had been accomplished on lighter volume or by just a few leading, heavy weighted stocks, it would make the whole move just another meaningless head fake."
http://www.marketoracle.co.uk/Article12135.html
Birchtree
Well-known member
Re: Birchtree's account talk
And here is a nice picture of the longer term inverse head and shoulder.
http://martinmarketreport.blogspot.com/2009/07/and-speaking-of-head-and-shoulders.html
Birchtree
Well-known member
Re: Birchtree's account talk
"According to cycles' theory, the highs of this new cycle are not likely in yet. Equity indices should go higher before revisiting those lows of the past week." Yes, I told some it was the Jupiter-Neptune conjunction that was helpful to the rally.
http://mmacycles.com/
Uptrend
Well-known member
Re: Birchtree's account talk
Bullitt:
Is this like the chicken and egg question? I have looked at a number of 5 minute charts and the VIX and SPX opposite movements appear to happen quite simultaneously. But they do not always move opposite! For last week consider this: on July 15, 2009 the VIX and SPX moved 2.8% in the positive direction. What does this mean?
"The SPX finished the day up 2.96%, with the VIX up 3.48%. This is the first time ever that both indices moved more than 2.8% in the same direction on the same day.
When both the VIX and SPX are up on the same day, this is historically bearish, generally conveying an edge of 0.25% or to the bears for 3-5 days. This edge begins to diminish substantially after about a month or so."
http://vixandmore.blogspot.com/
This suggests to me that further market weakness lies ahead. Not gambling with my hard earned money.Similar threads
