Birchtree's Account Talk

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Yes, I believe we are going to have another good day to make coin. It's about sitting with discomfort and being at peace with it. The market rewards what is hard to do.
 
So today we seem to have an inordinate fear of deflation - how prescient can one get. It's an intraday buying opportunity for some. 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. Nowhere close to that signal currently. So an intermediate top is likely as Clester believes at least four to six months away.
 
Bull markets are natural and healthy events that can easily last months, years, or decades. The full blown bullish move from bonds to stocks is slowly in the process of occurring and may take several years to unwind. This market is going to go higher than mosyt investors and lamenting bears are thinking. The economy is improving. The next catalyst for the market could be an improvement in the unemployment rate and net positive job creations - but right now we have to be satisfied with QE infinity.
 
It's actually a positive development when there is a cacophony of cry babies. Making money in the stock market isn't about making correct predictions, but in identifying the long-term trend of the market - which is up right now -and using investment strategies that are appropriate for it and my getting some margin money for wall flower shopping is my current goal. As long as there is fear the rally will continue.
 
Well the oceanic account is slowly making progress against the first week's give back: +$44K, +$22K, +$65K, +$14K -$46K for a gain of +$99K - that still leaves me -$51K in the hole for the month so far. When the small caps spring back next week I'll be there with open arms. So far there is very little giddiness in the markets and that is also a positive - next week has the potential to be bodacious. Snort.
 
Since I've been nibbling on furniture stocks for several years - I found this interesting. "One encouraging sign in Friday's retail report was a rise in housing related spending. That includes a 0.9% rise in furniture and 0.1% rise in builsing materials and garden supplies. That shows retailers are benefiting from the recovering housing market, which economists expect to fuel broader growth this year. Haverty Furniture Cos. (HVT) is among the retailers seeing the upside from the housing rebound. The Atlanta-based company operates 121 stores, mostly in the South and Midwest, and has seen strong sales in recent months because more people are buying new homes. Consumers are now more comfortable with spending on their homes because they have increased in value..after some very tough years. Haverty's comparable-store sales rose 11.5% in the first three months of 2013 from the same period a year ago. Consumers are buying higher-priced items such as sofas with customized upholstery that cost up to $2,000." I'm satisfied to let the market come to me - I have built some nice positions while waiting for the rebound.
 
And then there was this. "Studies have found that over a period of a decade or more, adding a basket of commodities to an investment portfolio can reduce volatility and provide protection against inflation. Anyone with a mind to do so, like Birchtree, has an opportunity today to get more of them for each investment dollar. The Dow Jones-UBS Commodity index has tumbled 10% in the past seven months and 22% in the past two years, due to a slowdown in demand growth, particularly from China, and a supply overhang from the investment boom of the preceding decade. At current levels the commodity index remains a barely half the peak levels seen in 2007, and it has advanced little since late 2003." Mindylou says back up the truck and load up while prices are golden - that's great advise in my opinion. Gimme more coal because I'm a renegade contrarian and a value shopper.
 
I'm not concerned about the current weakness in gold or other commodities. I believe 2013 will be a replay of some years gone by and that mid and late cyclicals will significantly outperform the broad market. Industrials, basic materials, and energy are the next sectors in line to be the top performers in the sector rotational model of the next phase of this cyclical bull market. And with so few people expecting stocks to keep rising bullish sentiment suggests the rally has more room to run.
 
I sold my positions in KEX and RKT to cover my check for my tax payments. There should be some left over to add to my ETF gold positions that I will continue to dollar cost average into. I've been through these commodity swoons before and they are always a temporary scenario. The primary purpose of analysis is to generate market scenarios that have a high probability of success for the primary purpose of monetizing on these trends that are usually contrary to the concensus view. I'm a buyer of gold and coal no matter the market conditions.
 
I have 6 or 7 dividends due today - so that's my small blessing. I get a chance to acquire more income for my future - the lower the price the more shares acquired and then the next payout is a wee bit larger - it all adds up eventually. I really hated to do my selling this morning but don't want the IRS check to bounce - so a sacrifice was required. It won't be my first or last. I'm actually excited about today's weakness - as strange as that may sound.
 
I suspect we could end the week on a neutral basis - these sharp set backs are usually anticipated and provide ample opportunity for golden prices. This is by no means the beginning of a 10% correction - rather a pause that refreshes. And if it is the beginning of a correction I'll still be standing. Snort.
 
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