Birchtree's Account Talk

[Birchtree]

Anthony,

I read a lot of material and usually just set my own tone and let the market come to me - and sometimes it never does. I'm just grateful that we held the 1056 on the SPX, 2094 on the Nasdaq and 9812 on the Dow. If we close 1% or more below these levels on all 3 major indexes, there's going to be trouble ahead for the bulls - so far so good. I'm staying with my strategy of reducing my TSP positions as we move forward in alignment with the VIX. Who knows where the Dow could be at the end of June - probably close to 13,000 and a perfect time for that 10% or better correction. If it doesn't happen and the year looks like 1995 instead of 2004 - then I move back into fully high risk.

"Bull markets do not die of old age. Instead they are assassinated - usually by central banks. So how many rate bullets does it take to fell a bull. You may not be surprised to hear that there is no precise answer because it depends mainly on sentiment and liquidity."

http://safehaven.com/article-15018.htm

 

[Birchtree]

"Monthly Stock Market Trends."

http://www.[[financialsense.com/fsu/editorials/wagner/2010/0205.html

 

[Birchtree]

If you want to see what Monday could potentially bring check out the Market Outlook thread #104 - see the graph Tom has posted of August 2007 and the comments by Bullitt.

 

[Birchtree]

The last four weeks have not been pleasant - I've gone from only $42K needed to get to the $1M to $274K needed to get to the $1M. This ends week #48 from the March bottom. I guess I'll just have to be patient until Ferdinand returns. So I've given back $232K in the last four weeks - I knew the deeper in I got the more the money would swing but it will also work that way to the upside. It might now be a full 52 weeks before I hit my target. I plan to continue buying into my base and building my sacrificial portfolio to stay ahead of the margin business - I think that will work and I won't have to disturb my base. Am I disheartened, nah, it's all in the game. I'm still up $726K from the March bottom and time heals all wounds. Snort.

 

[Birchtree]

"Bipolar Markets Looking for a Bounce. If we are going to move into new price highs over the coming several weeks, I expect the Big Caps to be the leaders moving the markets to new highs."

http://safehaven.com/article-15723.htm

 

[Warrenlm]

I think I recall you posting that you had "lost" $500K at the March bottom so that would mean almost a quarter million additional gain in less than a year. Quite a sum.

 

[Birchtree]

At the March bottom my oceanic account had a $1M devaluation - I didn't declare any losses because I held my positions and actually dumped more $K down the well. From June 26th of '09 I've made 713 individual DCA purchases into my base building income. I can do this because I'm utilizing margin while interest rates remain low. Eventually these purchases will help me instead of causing pain. In 48 weeks off the March lows I've made back $726K and this may just be the beginning - we are after all in the greatest bull market in history. I plan to really push my margin this year and concentrate in buying myself into happiness. I have no cap placed on the debit so what the bull will give me I'll gladly take. I am in the process of building another portfolio that can be used as a sacrificial lamb when we have consolidations like the current one. I'm trying to get prepared for the next headache which may come around the 4-year cycle trough after July. This current consolidation kind of snuck up on me while I was out of town so to speak. Not the next one. We are at the early stages of a stock market multi-year mega trend and the more I own the more I win - except for the last four weeks. The most I've ever made in a week during the bull move was $137K - it's time to do that again. The biggest drop was $112K in one week - week #10 to be exact and I didn't run then and I won't run now. Snort.

 

[anthony]

If you want to see what Monday could potentially bring check out the Market Outlook thread #104 - see the graph Tom has posted of August 2007 and the comments by Bullitt.

Could someone drop in a link to this? I'm having trouble finding it. Thanks.

 

[Birchtree]

Anthony,

You can find the link right under Member's Account Talk at TSP Talk's Account Talk on the forums page.

 

[KevinD]

http://www.tsptalk.com/mb/showpost.php?p=254924&postcount=104

 

[Birchtree]

We did develope a positive divergence on the NYAD MCO with a -69.02. Now the question is does or will it mean anything. At least the dumb money weekly indicator shows that investors remain extremely bullish and I'm in that camp. The other question is can 50 million frenchman be wrong. The intraday 9% from the 1/19 closing high hasn't been this oversold at any point during the rally - that leaves me satisfied and ready for higher highs. Because currently not withstanding the euro zone, corporate profits are surging at their largest ramp rate since mid-1975 and that smells delicious.

 

[Birchtree]

A friendly note to my lily pad friends. The first six months to 12 months of a new bull market are always the most disbelieved and unloved. Note that not one bull market in the past 60 years has lasted less than two years. There again have been enough ominous headlines to frighten investors to the sidelines and keep them there. From my humble perspective there is no indication of a stock market peak in the forseeable future especially when looking at the NYSE A/D line. The A/D line is not diverting, and it's very rare the price will top without A/D divergence. I can't wait for tomorrow and all next week. Snort.

 

[Boghie]

BirchTree,

I'm going to show my ignorance again, ahem

What the heck is an A/D Divergence - and what chart shows the line?

I know very little on technicals - which I am guessing this is. Have learned some from CH's discussions of the Seven Sentinals and your discussion of the VIX. Tom's discussions help solidly as well. I don't know if I want to be an expert in their use, but it could be a tool to keep my emotions out of the way

 

[Birchtree]

Bull market cycles don't end on bad news. They end after very long stretches of good news that make people forget their worries. Up cycle finishes are marked with a four-six month divergence between a top in the advance/decline line and major indexes. That is, the A/D line has typically been declining half a year before a final top in the major indexes is made. At present, the A/D line just made a new high a few weeks ago. So a top is likely at least four to six months away. Bullitt posted a nice A/D line graph a few weeks back but I don't remember where it was.

 

[tsptalk]

Bull market cycles don't end on bad news. They end after very long stretches of good news that make people forget their worries. Up cycle finishes are marked with a four-six month divergence between a top in the advance/decline line and major indexes. That is, the A/D line has typically been declining half a year before a final top in the major indexes is made. At present, the A/D line just made a new high a few weeks ago. So a top is likely at least four to six months away. Bullitt posted a nice A/D line graph a few weeks back but I don't remember where it was.

I knew that didn't sound like you and it was written over 3 months ago. Come on B, we need sources or it's plagerizing and copyright infringement.

"As Desmond points out, bull-market cycles don’t end on bad news. They end after very long stretches of good news that make people forget their worries. Up cycle finishes are marked with a four- to six-month divergence between a top in the advance/decline line and the major indexes. That is, the A/D line has typically been declining half a year before a final top in the major market indexes is made. At present, the A/D line just made a new high a few days ago. So a top is likely at least four to six months away."

http://moneymorning.com/2009/10/26/retail-activity-bullish-for-stocks/

 

[Birchtree]

You are right of course - I should have said that Desmond said: But it was a good article to read just the same. Appreciate the link for the education.

 

[Birchtree]

Dan Sullivan says: "Over the years, we have found that the ideal environment is one in which the S&P 500 records a limited number of trading sessions in which it gains 2% or more. During the prior bull market from 3/12/03 to 10/09/07, the SPX posted an impressive 94% gain, and yet on only 13 occasions did it manage to gain 2% or more in a single session."

 

[Birchtree]

"This wasn't your average week, the range for the SPX was higher than the previous weeks high and lower than the previous weeks low. This pattern doesn't show up very often on a weekly chart and is actually more of a bullish sign. The likelihood is that the VIX has initiated a bottoming process that could still take some time to develop. What this means is that it's not yet time to sell the farm but it could be in the not too distant future."

http://www.marketoracle.co.uk/Article17087.html

 

[Birchtree]

"You must truly love the market cause it will break you down mentally. Last weeks market action really allowed us to see which way the masses were moving. The extremely high selling volume and sharp price decline notified us that the market was trading off FEAR. And, last Thursday we actually saw PANIC which tells us the balance of the market (The HERD) were exiting their positions. When we see this happen, it's generally a good time to start scaling into long positions, as most of the down side has already happened."

http://www.marketoracle.co.uk/Article17074.html

 

[Birchtree]

"Dollar index has moved above its 200-day MA for the first time since July'08. At some point in the next few days or weeks, expect a rebound to a 'lower high' as high as the 1120 level of the S&P 500 index. Then over the following eight months, expect a decline to around 950, which was the breakout level in July last year. The two best recent examples were an 19-month span in 1983-1984 and an eight month span in 2004. Both of these down-biased sideways markets started later in the year (March in 2004 and June in 1983), which is why the January start of the recent slip took me a bit by surprise."

http://www.marketoracle.co.uk/Article17085.html

I've been looking for similarities to 1983 and haven't seen any yet - so who really knows what the future brings - I'm keeping my fingers crossed for 1995.