Birchtree's Account Talk

[robo]

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Birchtree wrote:

If I were interested in the I fund, I would focus my attention on Japan which comprises 23% of the I fund index.

I took your advice Friday and exchanged from mymoney market Vanguard account, into a Pacific Stock Index before 2:00 eastern time... It was up over 2.28% today, thanks for the recommendation.... I made a one day play on the I fund last week and made .7 cents a share, but got out for the big one today.... Oh well!!!!

IfI get a quick 6% or more gain in the Pacific I'm gone.... Vanguard only gives you 2 moves a year..... Thanks again

Some comments from a Tech on the next 2 weeks..

Every year it's the same -- the last five days before Labor Day have very low volume relative to the average for the previous 12 months. Then, once the holiday is behind us, volume increases -- often sharply. The chart below plots the 5-day average volume as a percentage of the 12-month average volume. In nine of the ten years shown it decreased going into the holiday, and increased daily with each post-holiday day. The bright red dots represent the ratio between the 5-day and 12-month average volume for each post-holiday day -- note how they invariably increase with time.

The only five-day period with less volume than Labor day is the week between Christmas and New Year's -- represented below by the large brown diamonds.

We have just 10 days left before the holiday, and if this year is like those charted below, this week should have low volume and next week should have even less.E

There is also a repeating pattern for gains and losses during this two week period. The next chart shows a 10-year composite of cumulative daily gains and losses. Exactly half of the two-week periods showed net gains, but in 9 out of 10 years there was a gain in the first week and a loss in the week just before Labor Day.

It is also notable that the gains were made in the first three days and and lost during the second three -- the last four were virtually unchanged on average. So, Monday, Tuesday and Wednesday were winners, Thursday Friday and Monday were losers and the last four days stood still -- everyone was probably at the beach.

Of course this is only an average of what has happened in the past and any individual year is likely to vary from the average, but the low volume and quiet, stable markets just before the holiday, is logical and likely to be repeated.

 

[robo]

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[robo]

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[robo]

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I hope the 1210 holds tomorrow, and we can get a bounce.... I had high hopes for 1220, but gone for now..... Added shares of C fund today.....


Some comments from a Tech: 8-23-05 3:00 PM

Closing Comment

Today was another constructive day. By that, I mean that the selling into the price targets given this morning found support an staged another rebound instead of going farther. If we can repeat this action tomorrow, we could be in a position to start to rally by the end of the day.

When I am certain that the lows are in, I will give projection targets for the rally.

I hope he is correct!

 

[The_Technician]

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I wish I could have your faith Robo.....but being what conditions currently are with the weak market showing since Aug 8th......I have little faith in any rebound....if fully expect cuts to the negative on major moves for another month or so....any breakthrough the high 1190's should send a message of the trend reversal....

Keep your eyes open....I believe that the bull trap that started the 8th of Aug...is in motion.....o

:dude:

 

[Birchtree]

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Today certainly seems dismal unless one is comfortably sitting in small caps. If we were oversold yesterday on some indicators we are even more oversold now. I think today was speculator reaction to the price of oil - this could be a blow off top and the roll over is next. I've got $.50 to let go in the C fund before I get rather uncomfortable - we will have some high velocity up moves before that happens. This is a pullback designed to shake the weak hands out before a resumption of the long awaited uptrend - at least I think so. Willing to hold the line - regardless.

 

[coolhand]

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Birchtree wrote:

Today certainly seems dismal unless one is comfortably sitting in small caps. If we were oversold yesterday on some indicators we are even more oversold now. I think today was speculator reaction to the price of oil - this could be a blow off top and the roll over is next. I've got $.50 to let go in the C fund before I get rather uncomfortable - we will have some high velocity up moves before that happens. This is a pullback designed to shake the weak hands out before a resumption of the long awaited uptrend - at least I think so. Willing to hold the line - regardless.

I agree with you BT. But it may be a few weeks before we get back on track for a sustained upward move. Especially if oil doesn't back off. Irrational exuberance or what??

 

[Birchtree]

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A word from Henry To,

"The total amount of shares that are shorted on the NYSE is now at 8.59 billion shares - 27 million shares more than the prior record set on May 15, 2005 and only 381 million shares more than the short interest outstanding on October 15, 2002 - right at the bottom of the last cyclical bear market. While the total outstanding short interest on the NYSE is at an all-time high, the SI ratio is still only 6.0. Recent bottoms (October 2002 and October 2004) have ended with the NYSE SI ratio at 6.7." Another couple of days like today should get us closer to the fuse to ignite the next sustained wave of advance.

 

[Birchtree]

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A word from Kennedy Gammage - he's bee around as long as I have - I'm searching for anything that might be contrarian to this downside.

"Any long-term (multi-year) study of intermediate-term bullish and bearish market periods, as measured by our favorite short to intermediate market timing tool, the McClellan Oscillator, shows that periods when the McClellan Oscillator moves up from below the Zero Line to positive readings above Zero are those when markets are moving up, and are generally favorable times to be invested and long stocks.

Conversely, periods when the McCellan Oscillator drops below Zero into negative territory, and remains there for several weeks, are generally periods when markets are correcting or going down, and are consequently unfavorable periods for buying and owning stocks. These frequently take the form of what Sherman McClellan, its inventor, dubbed Complex Bottom formations. These generally last 3 to 6 weeks.

We are currently finishing the sixth week of the current Complex Bottom formation, the Oscillator first having dropped below Zero on Monday, July 18th. This Complex Bottom has lasted about as long as the average - some would say longer. From the next spike low, we would expect the markets and the McClellan Oscillator to start a final move up - first up to, and then above the Zero Line and into positive territory. This will mark the end of the Complex Bottom formation, and the beginning of the several weeks September Labor Day rally. Both historic empirical and anecdotal evedence shows that days around Labor Day holiday are usually bullish periods in the markets. With the McClellan Oscillator about to complete a six week Complex Bottom formation and likely to turn positive, we don't foresee anything different for the current period" I'm staying patient.

Dennis-perma bull # 2

 

[Birchtree]

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I tried to post this last night - but it would not transfer - will attempt again.

A few words from an Eric Noel-

"When I first started trading, it astounded me how easy it was to lose money by executing trades in the direction I FELT the market was headed. It soon occured to me that the reason for this was that my emotional reaction to the tape was similar to the emotional reaction of the majority of others also reading the tape. Thua in time, I learned to trade in the direction that felt MOST uncomfortable.

Given the action in the US indices since the beginning of August, I feel very uncomfortable about taking a long position next week with the S&P nearing the 1200 mark as it FEELS to me as though it is soon to go off the egde of a cliff. Alas, I am not alone. If you look at the CBOE half hour intraday P/C ratios os August 26, 2005, you will note that the ratio spent the entire day over 1, and closed at 1.18. The majority is once again convinsed that the countertrend rally that started in October 2002 has FINALLY come to an end. Everybody also knows that September is historically the worst month for stocks." I say don't bet on it.

 

[Birchtree]

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"As regards Elliot wave analysis, the action since the most recent highs is clearly corrective in nature. The waves are overlapping and the sell-off very slow. The breadth and volume is characteristic of a B wave correction to correct an A wave upswing from the London attack low to the most recent high of 1245.68. This B wave has already retraced over .618 of the A wave in the S&P. So far I count 3 waves down and the third wave a C of the B wave may or may not be complete. If it did not complete on 8/26/05, then it should do so in the coming week and bottom somewhere very close to 1200. Thereafter, a C wave rally should ensue that takes the S&P to new multi-year highs. If wave C is 1.618 times wave A, a target of about 1300 is in order. It will be a fast rally with good breadth as C waves are third waves. It will be fueled by boatloads of shorts running for cover and "new" events should occur that the media considers conducive to a bullish market.

Getting ready to rock to the upside. My heart says this thing is going straight to hell, but my mind tells me otherwise." I will update the oceanic account tomorrow when I have more time - it's nice to keep track in both up and down markets.

Dennis - perma bull #2

 

[Birchtree]

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Ah, let's update the oceanic and tugbpoat for the last two weeks.

The oceanic peaked at $923K after some profit taking and is currently at $894K for a $29K loss for the two week period. This is tolerable from my perspective because I think this market goes much higher in the not to distant future. The market today was remarkably resilient and I'm looking forward to reinvesting some more dividends that are approaching. I actually made $8K yesterday with a lot of energy participation and probably held reasonably steady to day in the decline. The tugboat has put me behind about $10k from the high point in the C fund. It seems very few people on this site enjoy taking the punches - I prefer not to panic and keep my eye on the larger picture - that's when the real money will be earned - you'll see.

 

[Birchtree]

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I am really fighting the desire to take some profits - would like to let them run for awhile. But this is where it becomes difficult - letting some of the winners go to pick up some of the laggards - that will eventually become outperformers. Yesterday was good target shooting - let's have another.

 

[robo]

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Some comments from a Tech: 9-1-2005

Closing Comment

This is the second day in a row that the stock market has acted well. Yesterday was the break-out of the consolidation downtrend, and today, after going beyond the initial Fib projections -- a sign of strength -- the SPX and QQQQ had a mild consolidation fostered by the VST cycle. This is expected to be over by tomorrow with the up trend resuming afterward.

You may remember that I have been repeatedly talking about how the McClellan oscillator was improving. Today it broke through a 15-week downtrend line. This is significant because it is also the highest reading in 6 weeks.

Other positives are the NH/NL index which had two days of strong positive improvement, and the volume which also had two days of levels that have not been seen for many weeks. Both The A/D and volume figures are an important gauge of market stengthor weakness.

If this strength continues, I would not be surprised to se some of the stronger indices make new highs. In fact, the NYSE is very close to another historic high, as well as the XBD.

You will also remember that I had spoken of a 1255 projection that was never filled. Since the daily chart structure has the look of a five was pattern, this could very be the 5th wave, or more probably, the "B" portion of a A-B-C wave four, with the "C" wave being completed in October. We'll just have to see how this plays out.

For now, there could be just a little more early morning weakness as the VST cycle makes its low.

A rally tomorrow would be nice!

 

[Birchtree]

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Just a quick moment to update the oceanic account - it is presently at $926K with a gain of $32K on the week. I anticipate that this week will be productive if today is any guide. Let's see in July I made $63K and in August I lost $8K so I'm in fairly good position. I'm staying fully invested and am anticipatory to see how the market will treat me as we approach the previous March highs. My previous peak on a daily basis was $954K on 8/3/05. Will surpass that level this month for sure and then on to the $1M. I hope. Looking to start doing some more stock collecting for the portfolio in the near future. Got the strategy planned.

 

[Birchtree]

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Oh Boy,

Richard Russell, editor of Dow Theory Letters, has made a hugh bullish turn, at least as to the secondary trend. He has been almost exclusively bearish for six years now.

He likes the action of the DJUA and its recent new all-time high. "Normally, the Utility Average will hit its highs well before the final high in a bull market...."

Russell has also been looking at a SPX point and figure chart that is designed only to show major reversals. According to Russell, "The chart shows that if the S&P rises to 1250, this would be a powerful upside breakout, with a large upside target hundreds of points higher." Russell responds, "I'm not going to pretend that I know why the stock market suddenly turned strong. It makes absolutely no difference why the market turned strong. The reasons may be known in a few weeks or a few months. The important thing is simply the market action itself."

 

[teknobucks]

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Dennis bit worried bout this one.... http://www.wunderground.com/tropical/tracking/at200516_model.html

remember dora early sixties?

 

[JOVARN]

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A few short years ago people made fortunes just by being in the market, it mattered not what the PE ratio was, how or who managed the company or what product the company was offering the marketplace. I have no problems investing in market momentum for whatever reason as long as I am making some money. I think the charts and graphs are nice but in this day and age of globalization, contracting out and as many of the most powerful cooperation’s in world are being run by the same families/cooperation’s; I believe it’s harder and harder to use past performance as an indicator. The secrete to making money in this market is trying to guess what moves the puppeteers are going to make then dance all to the way to the bank.

Just my 2 cents.

 

[coolhand]

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JOVARN wrote:

The secrete to making money in this market is trying to guess what moves the puppeteers are going to make then dance all to the way to the bank.

Just my 2 cents.

Did you read that book???

 

[JOVARN]

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What Book ?