Birchtree's Account Talk

[Birchtree]

What - me worry - nah.

Productivity revised up to 3.7 percent from 3.2 percent. Labor costs contained - rose at only a 1.6 percent, a downward revision from the 2.5 percent gain reported last month. And we had a cooler manufacturing activity - came in at 54.4 versus expectation of 55.5 down from 57.2. That means less pressure on the Fed to keep raisingf interest rates to fight inflation because the economy is slowing - but the consumer is still spending.

Energy infrastructure in the U.S. has been underinvested in for a generation. That means existing infrastructure is that much more valuable, and the demand for energy in this country is only going up. Watch for more LBOs and takeovers. If you think the economy of the U.S. is going to grow, you want to own energy infrastructure. Increased volatility may be a traders dream.

 

[Birchtree]

Re: Birchtree's account talk

The Japanese economy - the world's second largest after the U.S. - is showing healthy growth. It expanded at an annualized rate of 1.9% in the January to March quarter, and some economists forecast growth of about 3% for calendar 2006. Yesterday, the government announced a third straight month of growth in average wages over the previous year. Housing starts considered to be a leading indicator of consumption - jumped 15% in April from the year-earlier month. Japan's corporate scene has many positive factors for stocks. The country is experiencing a small boom in mergers and acquisitions as well as more investor friendly dividend policies. Profits were strong inb the latest quarter.

But fears about the U.S. market for Japanese products are outweighing such considerations, and the Nikkei is down 4% since the start of the year - after gaining some 40% in 2005. It looks like major exporters to the U.S. will rebound.

 

[Birchtree]

Taking that gift horse...

Went in early this morning and punched out of my Grant Pride on the high and just finished my afternoon buys: more Lubys, Mosaic, AZZ lnc, Worthington, Lyondell, Louisiana Pacific, El Paso, Reliant Resources, Owens Illinois. Pretty good pricing today. I think we pop on the close.

 

[Birchtree]

Set for a pause - me thinks.

Unit labor costs are running -0.8%, the weakest pace since the fourth quarter of 2002, when the Fed was busy cutting rates. That should be important for the Fed because trends in unit labor costs determine almost three quarters of what happens to final underlying inflation.

And because of the weak dollar we're seeing very strong demand for capital goods in Asian markets, both from Western firms building local facilities and from local firms looking to compete with the foreigners. For example as illustration - Nordson Corp., Westlake, Ohio, which makes equipment that applies paint and other coatings to everything from cereal boxes to washing machines, has seen Asian orders up 48% in the most recent quarter from a year earlier. This is happening all over this country. Very positive for future earnings of these companies.

 

[robo]

Re: Birchtree's account talk

Birchtree,

Henry has went netural and stated prior to today's sell-off the fed was not done. Thinks we take a shot at the highs soon.

Take care! I'll send you his latest.

Good Investing / Trading!

 

[Birchtree]

Forward price to earnings ratio for OEX

If you look at the forward price to earnings ratio (which is a stock's trading multiple based on estimated, rathewr than past, earnings) for the largest 100 stocks in the S&P 500, compared with other large-cap stocks, you would see that the ratio was as high as 1.4 in 1999 but was 0.9 this year, which means valuations for mega-satocks are particularly depressed and signal a good buying opportunity. This tells me that small caps are unlikely to lead the market over the next few years. How many times do I have to be wrong before redemption?

 

[TiCKed]

Re: Forward price to earnings ratio for OEX

How many times do I have to be wrong before redemption?

Apparently, around here you only have to right once, and then you can call yourself an expert!

 

[Birchtree]

Re: Birchtree's account talk

Well here goes for trying to be right just once. The next advance may be a multiweek advance that lasts all summer. How's that for non-provacation.

 

[Rod]

Re: Birchtree's account talk

Well Birch, you KNOW that if you were to bail then the S&P 500 would TAKE OFF!!!

 

[robo]

Re: Birchtree's account talk

Well Birch, you KNOW that if you were to bail then the S&P 500 would TAKE OFF!!!

Got to Hold! Oddball is long!!!!!

In short, the oddball S&P system works as follows:

•If the rate of change of the advancing issues is greater than the buy trigger level, buy the market.

•If the rate of change of the advancing issues is less than the sell trigger level, sell the market.


http://www.markbrown.com/active.shtml

 

[Birchtree]

Re: Birchtree's account talk

We are approaching sacrifice time again - when a prosperous beauty goes out the portfolio to make room for a bouquet of good dividend paying wall flowers. I mean I made the plan two weeks ago - but gee it's still emotional ya know. After all I am a permabull.

 

[Birchtree]

Re: Birchtree's account talk

al Qaeda's Zarqawi is dead. Hooah! May he burn forever.

 

[robo]

Re: Birchtree's account talk

Birchtree,

Rydex traders are starting to confirm your prediction. Many have been leaving small-cap funds and are moving into large caps. We will have to wait until December to add up our YTD returns, but I added shares of the C Fund today.

 

[Birchtree]

Re: Birchtree's account talk

Robo,

I hope no one is in a hurry to the large caps - but I can't stop destiny. I did however finally get a C fund purchase under $14.00. Wouldn't mind a few more shares for the collection before the take off - next Wednesday could be NASA day.

 

[robo]

Re: Birchtree's account talk

Birchtree,

Henry went 50% long on 6-8-06 and will go to a 100% when the volatility is gone.

AS YOU KNOW, HE PLAYS ONLY THE BIG DOGS!!!!!!

 

[robo]

Re: Birchtree's account talk

Birchtree,


You commented that this may be the low for the year. Now wouldn't that surprise some of the BIG MONEY. Most of whom have apparently decided that they'll wait until October to buy? Could the Birchtree Express be leaving the station and leaving them behind? HMMMM!!! Mr Market almost never does what most think! The Bulls and Bears will slug it out again next week. Put on your seat belt and, "enjoy the ride!"

Ya, wait until October when stocks are cheap!!! Maybe, but maybe not!

We will have to wait until December 31 to see who got it RIGHT!!!!

I play much shorter term trades, but it would be cool if you got it right my friend!!!

When they are Yelling, I am a selling!! And when they are crying, I am a buying!!!

Take Care!

Added shares of the S&P at the close. I used my wifes 401K. Around 65% long now... If support keeps holding I'll keep adding....

 

[Birchtree]

Re: Birchtree's account talk

I think it's time to go on a LRRP mission. I'm on the hunt for Lizards. Not much room for freedom of expression this evening - of course I was crass and deserve to be deleted. But there is always another day to carry on.

 

[robo]

Re: Birchtree's account talk

Birchtree,

Still dollar cost averaging on the way down. Currently 75% long! Getting short signals from some TA's in cash. They started shorting today. I emailed one and thanked him for the short signal after the QQQQ's are now down over 11%. I told him I'll pass and I doubt that he will reply. If the Market goes down another 5%, (which it could ) he will probably email me back.

My story in May:

I went away in May, but came back to play!!!

I thought I was smart buying at 1270.

I thought I was really smart buying at 1260.

I thought I was really really smart Friday buying at 1251.

Today I bought at the 1230's, but I'm not feeling so smart anymore.

The QQQQ's is another story with to much pain to talk about!

I do feel somewhat better knowing Henry is now 100% long with us!!!
I'm now hoping the 1220's hold or it's 1200...

Take care!!!

 

[Birchtree]

Re: Birchtree's account talk

Robo,

That 1230 was the hardest buy - that's the way it always is, especially when you feel so alone - am I the only fool brave enough to get these (steal these) prices. Looking forward to getting a few more wall flowers myself. I find that my investment senses are better honed when there is pain deliverance - kinda like sitting in a listening hole outside the wire. Take care and perhaps the trap for the bears has been set for this week. I still think the Fed will pause.

Dennis - permabull#1

 

[tsptalk]

Re: Birchtree's account talk

...am I the only fool brave enough to get these (steal these) prices.

It's been a long time Birch, but I'm a fool these days myself. Now you're in trouble.