Birchtree's Account Talk

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Re: Birchtree's account talk

The damage yesterday was minimal based on the breadth figures. The NYSE Composite only has to make 10 more points to 9468.70 for another new all-time high. The NYSE breadth MCSUM declining tops line, that was broken 2 days ago to the upside, is actually holding the pattern intact. Perhaps the PPI will provide the market a needed boost in confidence to continue having money flow moving as well as it has. The NYSE breadth MCO has drifted back to its zero line but has not generated a cross over sell signal at this point and if we close strong today there'll be no worries. We just had a nice correction to allow further stock accumulation. The Shadow says always expect the unexpected.
 
Re: Birchtree's account talk

Yuppers. I'm afraid the melt-up will be happening before I can get many more shares.
 
Re: Birchtree's account talk

Yes, it's all in the timing. But there will be other market cycles going forward that you can get a bigger piece of. 17,000 on the Dow and 1700 on the SPX will leave me set - but I'll continue to play at least for the next 20 years. But it does take money to make money - pity the poor real estate speculator who is locked out of this action. Second thought offer no pity - they made their choices.
 
Re: Birchtree's account talk

I don't have much pity on them. Pumping up the real estate market like that has made it impossible for me to buy a house to raise my children in. I just gotta hope I get the job in Oklahoma City I applied to. At least houses are affordable there.
 
Re: Birchtree's account talk

A brief comment from Don Hayes. "If recent mid cycle slow downs (1985 + 1995) are any indication of future market moves, this should be a positive for the markets going forward. The valuation indicator continues to send an unbelievably bullish message with equities 30% undervalued". Not to repeat myself, but this market is coiled and ready to release. The greatest ally that the bulls have right now is the 16 TRIN that was generated on 2/27. 3rd waves are wonders to behold because this is the time in which the majority realizes the path of least resistance. Simply waiting on Tom to line up.
 
Re: Birchtree's account talk

A guy I work with is sitting on the lilly pad because 2/27 scared him too much. He's waiting for the market to be in an obvious uptrend. I told him that when it is obvious to him, he'll be getting in at the top.
 
Re: Birchtree's account talk

Ferdinand, we have a friend in the TICK. The TICK is an advance/decline line, you can use the 19 period EMA and the 39 period EMA on any stock chart and you've created a view of the price pattern's MCSUM. The distance between these two EMA's are the actual view of the MCSUM for a price pattern being measured. 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. The A/D line gives the bigger picture of things.
 
Re: Birchtree's account talk

Birchtree said:
A brief comment from Don Hayes.... Simply waiting on Tom to line up.
Click to expand...
I am a big fan of Don Hays and unfortunately for me, I think he and you are right. I say unfortunately because I keep missing the boat when it comes into the dock. I am looking for big gains from the market in the next year but I've become obsessed with buying at a 5% to 10% or more dip.

Many "smart" money managers I follow are thinking the same thing as I am, but Don Hays is one that made money the whole time while waiting for a buying opp. He is also the one that taught me to keep something in the market even during the dips. That's why I was supposed to be 50% stocks while I waited, but I couldn't do it. Lack of discipline.
 
Re: Birchtree's account talk

You know 1995 is just around the corner. Even 10% will give you a bite. I noticed you were in C fund awile back - check the point difference from then and until now.
 
Re: Birchtree's account talk

Birchtree said:
You know 1995 is just around the corner.
Click to expand...

The dollar is at its low, ready to spring forward. Small caps and internationals are very high. Large Caps are pretty low compared to them and should grow as the dollar grows, too.
 
Re: Birchtree's account talk

Guys,
Since the S fund is not a pure small cap fund, but has much of a medium cap profile, do you think it will benefit us with similar performance as large caps?

fabijo said:
The dollar is at its low, ready to spring forward. Small caps and internationals are very high. Large Caps are pretty low compared to them and should grow as the dollar grows, too.
Click to expand...
 
Re: Birchtree's account talk

It is never easy to pull away from the leadership sectors. The small caps have now been on an eight year outperformance run and may even continue for another couple of years. But eventually they will hit the wall. I've been gently repositioning the Mrs out of her small cap fund for the last two years and would hope to be done sometime in 2008. She's lined up heavily into the large caps and international fund - I'm actually more heavily invested in the C fund with a touch of the I fund. Shares of U.S. companies are getting retired like never before. According to the Federal Reserve, a record of a net $548 billion of stock was taken off the market last year, up from the old record - set the year before - of $295 billion. There are two forces at work: The breakneck pace of share buybacks and the buyout boom. Compnaies in the S&P 500 purchased $432 billion of their shares last year, more than enough to sop up the shares they issued. Buyouts, where public companies get taken private, are also draining shares off the U.S. stock market. Private equity buyout firms were behind five of the 10 largest takeover deals last year. This frenzied pace of buybacks and buyouts continues. The S fund will certainly benefit but I think money has already started to shift.
 
Re: Birchtree's account talk

From Rosenberg of Merrill Lynch on 4/13/07.

"Similar to the Fed, we do expect inflation to eventually moderate in response to cooling U.S. aggregate demand. Although it may not reach below the desired upward bound of 2% until the end of the year, even a deceleration in the inflation rate would be enough to give the Fed the room to cut rates. We expect the Fed to lower the funds rate to 4.25% by the end of the year. In our view, that will underpin an across the curve rally in bonds, led by the short end. Consequently, there should be a bullish steepener in the second half of the year, one that extends into the first quarter of 2008 as the Fed ultimately lowers the funds rate to 3.75%". And Rosenberg is usually bearish.

What we want to maintain is the discipline to always be looking for change before the majority realizes what's going on. In an uptrend we're looking for bearish divergence - lack of money flow etc, in a downtrend we're looking for the building blocks of a rally. Monday could be day number 11 of 12 on the upside. Tuesday could be day number 12 of 13 on the upside. Snort.
 
Re: Birchtree's account talk

It means the raging bull market will last a lot longer now that the real estate speculator is not in a position to liquify and participate. The bull likes to take as few people as possible to the upside. What would be the most important sign that the markets have peaked? A full capitulation by investors, primarily by fast money. That would be evident in a move by sentiment indicators to excessive optimism. Currently the CBOE put/call ratio remains high, fast money is still short high beta indexes.
 
Re: Birchtree's account talk

What a nice pin action day today. The MCSUM continues to suggest an upside big time with the large separation of postings - lots of money coming into the market. Any pull back in price should be used as continued buying opportunities. Even if we fail here, the price action is not going to fall apart. The MCSUM only measures the distance between two shorter term trend lines. One is the 19 day EMA and the other is the 39 day EMA, and they are measuring the directional move of the A/D line itself. So the higher or lower the MCSUM moves from its zero line the closer or further apart these same EMA's are to each other. These tools measure the trend of the A/D line in two different time sets. As long as the interest rate sensitive A/D lines keep moving up things could continue to firm for quite a while. The percentage of U.S. mutual fund assets in domestic stocks is the lowest since at least 1984. As a renegade contrarian I like that foolishness. The greatest gains in the SPX index often come in the first quarter of the third year of a Presidential Cycle - we missed this time around but are now catching up and this rally should carry into June.
 
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