Birchtree's Account Talk

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Perhaps this will be my week to play catch up. The week ended 5/7/10 my oceanic gave up $278K - I would dearly like to regain that value. So Monday I took in $59K - only $219K left to make up. I'm such a dreamer I know - but the reality is it's possible at this point in the cycle. We could be starting another pre April move to prior highs.
 
hate to rain on your parade, you've waited patiently for a long time.
But... you know that "short squeeze" you were talking about...?
things that make you go hmmmm.
Hey- how's that garden? What's for dinner?

9/18/2010
Spiralling price of Ireland's debt leaves Somers 'aghast'

9/20/2010
Bank warns on sovereign debt after Ireland denies approach to IMF for bailout

9/20/2010
RATE FUTURES REPORT: Options Traders Watchful On Fed Outlook

By Jacob Bunge
Of DOW JONES NEWSWIRES

CHICAGO (Dow Jones)--Heavy trading in Treasury derivatives contracts on Monday indicated some traders are watchful for any softening in the U.S. Federal Reserve's economic outlook.

Thousands of options contracts on Treasury futures prices were bought Monday in transactions that will pay off if the Federal Open Market Committee offers any indication following its Tuesday meeting that the U.S. central bank may pursue further measures to recharge the economy.

That sentiment helped propel interest rate futures prices higher Monday, bucking a big rally in stock indexes that followed a report from the National Bureau of Economic Research showing the U.S. recession came to an end in June 2009.

"It's a little positioning ahead [of the FOMC release], just in case," said Michael Gregory, senior economist with BMO Capital Markets.

Investors have been closely watching the Federal Reserve for months as a stalled economic recovery in the U.S. has prompted some to wonder what, if anything, the central bank could do to further spur growth.

The Fed last month announced it would again buy Treasurys in another instance of quantitative easing, aimed at injecting additional cash into the market.

Monday's options plays, many of which were in contracts expiring Friday, indicated traders were preparing in case the Fed hints economic conditions are continuing to get worse, which the central bank would be compelled to address.

"These are short-term options that last only a few more days, so someone's playing something for tomorrow," said Craig Ross, president of Apex Futures.

If there is no such sign from the Federal Reserve--a possibility that Ross and others feel is likely--the Treasury futures market could be primed for a sell-off. Ross noted the market has been looking "toppy" for weeks as investors debate whether the months-long rise in prices may be ready to wind down.

Traders meanwhile dialed back expectations for the Federal Reserve's benchmark interest rate to move higher in the third quarter of next year.

October 2011-dated fed funds futures settled 1.5 basis points higher on light volume Monday, pricing in a 36% chance for the FOMC to lift rates at its late September meeting next year, down from a 42% chance seen at the close of trading Friday.

Eurodollar futures prices also climbed Monday as investors continued to eye the possibility of rising credit tensions in Europe, after fears around Ireland arose again on Friday.

Eurodollars are tied to the London interbank offered rate, a global yardstick for floating rate lending. The possibility of continued strife among European institutions is seen requiring central banks to maintain efforts to keep credit flowing, and hold rates lower.

"It's again the idea that perhaps the problems in Europe aren't finished," said Alex Manzara, a veteran interest rate futures broker with TJM Investment Services. "At the margin that puts a little bit of a bid into U.S. fixed income."

The front-month December Eurodollar contract settled 1.5 basis points higher Monday at 90.605, reflecting market expectations that the three-month dollar Libor will rise to 0.395% from current fixing of 0.29031%. That marks a lower expected rate than the 0.41% expected rate contract priced in at Friday's close.

Quarterly 2011 contracts also moved higher as investors positioned for the Libor to hold lower in the year ahead.
 
I noticed where #10 Lostdawg has stepped aside to the lily pad. He's being kind. If we happen to close weak today perhaps the S fund will experience more pain than the C fund. "Fear drives out greed in the bears and greed drives out fear in the bulls." I'll take what the market will offer until the middle of October - then I'll make a few small steps to the lily pad and wait for the approaching consolidation from the 4-year cycle. We may have already experienced this pressure back in July but it won't hurt to hedge a little.
 
Birchtree said:
I noticed where #10 Lostdawg has stepped aside to the lily pad. He's being kind. If we happen to close weak today perhaps the S fund will experience more pain than the C fund. "Fear drives out greed in the bears and greed drives out fear in the bulls." I'll take what the market will offer until the middle of October - then I'll make a few small steps to the lily pad and wait for the approaching consolidation from the 4-year cycle. We may have already experienced this pressure back in July but it won't hurt to hedge a little.
Click to expand...

Birch, can you elaborate your thoughts on the 4-year cycle? How much consolidation are you talking about?

Thanks,

Steve
 
If the four year cycle has not already nested it could be painful. Anywhere from 10% to 15% would be expected to the downside - but I really think we've already paid that price. But nothing is for sure in this game - thus hedging a little for some capital preservation might be wise. The higher we go into October the higher the danger - after the nesting we should see a very nice rally up leg into the close of 2010. Or one could just absorb the pain and patiently wait for the market to recover - anyway I won't move more than 20% to safety. I'm staying aggressive for as long as I'm able.
 
My friends get ready for the rebound tomorrow - the sell off is healthy. It builds the base for the next bullish stampede. Look for an uptick in Treasury rates to kick the bull into high gear.
 
The bull market will power higher as long as people don't start buying into it in droves and as long as the prevailing belief is that it's a cyclical bull within a secular bear. There is a great amount of evidence suggesting that the A/D line will not top simultaneously with price. So the time to be on guard will be when the major market averages make new highs, but the A/D line falls short. That is not the case today when the A/D line cumulative just put in a new all time high. Within Elliott, the 'third of the third' is known as the point of recognition, the epi center of an enormous advance - friends it's on the horizon.
 
Nnuut is going 100% S COB - he'll be there no longer than four days because he refuses to wear sticky pants. Men who can be both right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a speculator has firmly grasped this that he can make big money.
 
I guess it's a good day to be clucking. Two more of our top 15 have moved to the lily pad COB. They are #11 - hotshot and #13 - Truehonest. Thanks guys that break will help come next week. Yup, fear drives out greed in the bears and greed drives out fear in the bulls. Now I'm forced to chase the most bearish bull I know - JTH. He'll move back to safety soon enough and then I boing ahead.
 
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