Bull Pen - Fall 2006

[Griffin]

Time for a new Bull Pen:

The question of the day (actually for next week) is: stay in stocks or punch out?

As Tom has pointed out, there is a long history of seasonal post labor day drops. However, the seasonal stuff has been wrong more often then right this past year. There is definitely an air of seasonal indifference floating around. I don’t take it to seriously, the availability of information has altered the landscape from 30-50 years ago. I am more concerned with the trend over the past decade.

On the other hand (who was it that said he wanted a one armed economist?), there has been a moderate post labor day drop every year that I looked at going back to the late nineties – now were talking 6-7 years in a row….that’s a little different then a 50 year average.

The last time the jobs report came out was August 4. Look at just about any chart, it’s that lone long candle sticking up out of the pack, the market spiked and dropped back before closing bell ending slightly down for the day. That spike was preceded by 4 days of toppy action and followed by a consolidation. That jobs data was weak….a sure sign the Fed would stop tightening, many argued. They did….so what now? after the Fed minutes this weak, it seems we could be setting up for a repeat, without the preceding days of the toppy action. I suspect we could see another rally around weak data suggesting the Fed should not continue the rate hikes and hopefully ending on a positive side.

I am sitting in the S-fund and will probably punch out tomorrow. The last few “critical days” have really turned out to be snoozers, with the real action lagging a couple of days behind – catching many folks off guard. Tuesday may not bring the big drop….but watch it. Wednesday or Thursday could be a nail bitter.

The clincher for me to move out is the put/call data Tom has been posting.

 

[pointman72]

Griffin,

Been 100% S for a little while (10 days) and plan to stay a while longer.

Been reviewing the same data as you, but can't ignore the following:
- S is undervalued by at least 8 percent
- S did not surge during May-June to catch-up with I fund as it did last year. (When S does this it is irrespective of C or I's momentum).
- Beginning to see the migrating of funds from Bonds and S&P to small caps. Necessary to fuel upward momentum.

Really think there is a possibility that S could break all the rules for September, while C & I remain status quo.

Hope I didn't curse things.

Just my opinion.

Have a great holiday and keep smiling.

 

[Griffin]

Really think there is a possibility that S could break all the rules for September, while C & I remain status quo.

Hope I didn't curse things.

Just my opinion.

Have a great holiday and keep smiling.

Pointman,

I have been seeing and debating the same thing....and so have a lot of people....so if it doesn't go your way, your not the only one to blame. However, If I do get suckered back in next week, and get smacked, I'll be sure to let you have it!

I applaud you for living up to your name's sake. I got my med kit, if you go down.

Just kidding.....you may very well be right, this is what I will be looking for to move back in next week:

- the dollar has a strong day,
- DWCP moves sides ways
- the S&P is only down slightly
- the RSI and MACD run flat
- the talking heads start chanting "sell"

I really believe we will have a couple of days for the market to sort it's self out. However, the S-Fund will absolutely continue to be my fund of choice for the upcoming weeks.

Check out the cup and handle comment I made over at the market thread. That's my story and I'm sticking to it (for now)

 

[Spaf]

Griff,
I put a temporary lock on the June Bull pen, till folks get use to your fall thread....
Ya did good, almost 200 replies and close to 9000 views.....
Spaf

 

[Griffin]

Griff,
I put a temporary lock on the June Bull pen, till folks get use to your fall thread....
Ya did good, almost 200 replies and close to 9000 views.....
Spaf

Thanks.

On to the money flow - which I didn't calculate - only to say that just about everyone has moved to the G and/or/combo F.

Tom's survey is showing about a 1:1 ratio of bulls to bears with 20% neutral.

I intepret this as a lot of caution but also quite a bit of skepticism. If the general market is feeling the same, this could set us up for a very difficult choice come Tuesday. A rally Tuesday would through some urgency driven panic as folks scramble to get back in mixed with the fear of a sucker rally. The market likes to be riding high in the channel as we come into these critical days - just like the last Fed meeting. Of course, if you were in then, you got whipped around with a net result of three days of pain. Maybe this is why folks are so cautious this go around.

I've been talking cup and handle, with these next couple of days being the start of the handle, however, there is a possibility that we will see the current upward wedges close and an even steeper run towards May's highs - which of course I would be looking for a handle to form there. In this scenario, S-fund holders are going to make a truck load of money. A contrarian indicator....too good to be true? :notrust:

Thought/opinions?

 

[Wheels]

On to the money flow - which I didn't calculate - only to say that just about everyone has moved to the G and/or/combo F.

If you look at both today's and yesterday's transfers, you'll see even a heavier move to safety.

Your cup and handle description pretty much goes over my head. My technical analysis does not go too much deeper than support and resistance. I've never bothered to try to understand very much of it because I don't put a lot of stock in it, pardon the pun. Speaking of resistance, it seems to me that the S&P has approached this 1310 area quite a few times in the last few months and each time it has failed to break resistance. It has to happen one of these times.

The things that make me nervous are that the S will have 5 solid up days in a row if today holds. But the C's gains have been more muted so there still might be some room to run. But maybe not, since Tom's indicators are showing the market to be quite overbought. Also being such a contrarian makes me a little nervous but Tom has explained many times that this might be a good thing.

But the biggest reason that I decided to stay (TSP students of finance pay attention here) is that 12:00pm came and went while I was mulling all of this over. Like T.O said, I overslept.

I have 3 whole days to dwell on whether I've done the right thing or not.

 

[Griffin]

....Speaking of resistance, it seems to me that the S&P has approached this 1310 area quite a few times in the last few months and each time it has failed to break resistance. It has to happen one of these times.....The things that make me nervous are that the S will have 5 solid up days in a row if today holds. But the C's gains have been more muted so there still might be some room to run. But maybe not, since Tom's indicators are showing the market to be quite overbought.......I have 3 whole days to dwell on whether I've done the right thing or not.

Dave, looks like you made a good call (kudos to pointman72 also). I noticed you both decided to hold your positions. After today's action, you may very well get a couple more positive days.

I was wringing my hands all lunch and actually logged into TSP twice, only to change my mind at the last second. The indicators are taunting me to stay out, but I can see a big push higher coming in the very near future, the volume today was average, which is what ultimately kept me out. I am undecided on what I will do tomorrow.

 

[Birchtree]

Fear is good, pain is good, but greed is better. Take your time, I'll save you a seat and you can catch us at the next station. Providing we of course stop.

 

[Griffin]

Fear is good, pain is good, but greed is better. Take your time, I'll save you a seat and you can catch us at the next station. Providing we of course stop.

Pre-market ain't looking so hot, looks like the train may be backing up to let us all back on. I will be watching that volume....greed is better.....a nice 2-3% pullback, and I will have the I-fund by the short hairs.

 

[Show-me]

Griffin,

Could be an opportunity for sure! I'll be watch'n!

Pre-market ain't looking so hot, looks like the train may be backing up to let us all back on. I will be watching that volume....greed is better.....a nice 2-3% pullback, and I will have the I-fund by the short hairs.

 

[Griffin]

Cup and Handle

Definition of a handle

Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller the retracement is, the more bullish the formation and significant the breakout. Sometimes it is prudent to wait for a break above the resistance line established by the highs of the cup.

this is from

http://stockcharts.com/education/ChartAnalysis/cupHandle.html

Malarchy on that last sentance....I want every last stinkin dime I'm lookin at 1290 on the S&P for the buy in point (note: subject to change depending on what happens over the next couple of days....but I believe it's best to have plan and refine it as you go)

 

[Griffin]

I want every last stinkin dime I'm lookin at 1290 on the S&P for the buy in point (note: subject to change depending on what happens over the next couple of days....but I believe it's best to have plan and refine it as you go)

Coming down too fast....I am not going to move today.

 

[Griffin]

Will support hold at 1290? Last Thursday night I inititated a move back into stocks for Friday night. At that time, I believed we were going to see a drop to the 1290 level (I made that call because I would did not have access to the internet on Friday). My expectation was that 1290 would be support.

Now I have some doubts. If 1290 fails, 1280 becomes the more likely support level for the S&P. Eitherway, I expect tomorrow to be either sideways along 1290 or it will fail. If 1290 does turn out to hold, I would expect tomorrow's gains to be relatively small, however a significant rally would be in the works before the end of the week.

I am going to move to the G but I may very well move back into stocks tomorrow if 1290 holds.

 

[Griffin]

I am satisfied that this is not going any lower, so I'm back in the S-fund tonight. I do expect some chop later in the day. My current plan is to hold until we get in the approach window for the next Fed meeting. The market has been riding high in the channel approaching these meetings as of late.

 

[Wheels]

There was a large move amongst TSPtalkers today out of cash and into stocks (particularly the I fund). I considered a move myself. The contrarian in me considered moving to the G because all of you were moving into stocks. The competitor in me considered moving into the I fund because I am finally ahead of the I fund it would be great to finish the year above all the stock funds. However you never know when an FV is going to mess up the timing of a move into or out of the I fund. In the end I didn't do anything because the employee in me was dealing with an idiot supervisor that couldn't get me out on a break before noon.

 

[Griffin]

However you never know when an FV is going to mess up the timing of a move into or out of the I fund. In the end I didn't do anything because the employee in me was dealing with an idiot supervisor that couldn't get me out on a break before noon.

Dave,

I know the feeling, yesterday I bailed to the G because I had to leave for a meeting, while the market was still was breaking fresh ground on a new one week low. Not necessarly a bad call, given the circumstances at the time, but the competitor in me is a bit annoyed, I probably would have cancelled that move at 1155. I'm out close to 1.5% because of it.

I hate when the job get's in the way of my hobby (oops. did I say that out loud ).

 

[sugarandspice]

Use the thriftline. It takes less than 2 minutes to make your IFT's once you know the buttons to push.

 

[Griffin]

Use the thriftline. It takes less than 2 minutes to make your IFT's once you know the buttons to push.

The problem wasn't making the change, it's was lack of access to the information that would have told me to change. I appreciate the suggestion though.

 

[Wheels]

Use the thriftline. It takes less than 2 minutes to make your IFT's once you know the buttons to push.

They kind of frown on making calls while I'm supposed to be separating airplanes.

 

[Griffin]

this is killing me..............what a colossal mistake I made yesterday - the third largest mistake of the year, possibly the second if the DWCP breaks above 1.6% for the day. I think I just lost my edge on the I-fund again :nuts: .

I called 4-6 days for the bottom, the 1290 bottom, and the no retest for the bottom....I had this rally locked on and then second guessed myself.

The morale of this story is: PLAN YOUR FIGHT AND FIGHT YOUR PLAN