Bull Pen - Fall 2006

I think we kissed the SPX 200 SMA at 1366 and then rebounced. Not sure if we penetrated that level on the intraday move.
 
James,

Were you only inches away from the panic button or will that transpire tomorrow. We may be looking at this volatility for sometime going forward, but I don't think we are anywhere close to the top in the bull market. This market is going to turn into a gravey train - and the poor subprimers are locked. The realestate speculator is borderline toast - and will not be able to participate until we are closer to the top three years down the road. That makes Ferdinand happy. Snort.
 
Wednesday, March 14, 2007
.... forest for the trees....
On doom and gloom days like yesterday, i find it helpful to step back and look at the bigger picture.
Here is my long term(1-2yrs) projection for the ndx. No bear market here.

http://fibo-count.blogspot.com/
 
I think we kissed the SPX 200 SMA at 1366 and then rebounced. Not sure if we penetrated that level on the intraday move.



The DOW did indeed go down and test its 200 ema at 11958 (see last post) and stocks find their footing, especially techs. It looks like the worst could be over for now, as long as the Yen does not start another bid.
The ADDEC lines are still negative so this bounce is not to be completely trusted, although I would not necessarily short it. NQ needs to close above 1754.25 in order to set up further gains tomorrow and Friday.

http://aheadofthenews.com/
 
Comments from article below: Nikkei futures are indicating a flat open in Japan. I would like to see emerging markets stabilize tonight before shifting market exposure further.





BOTTOM LINE: The Portfolio finished higher today on gains in my Computer longs, Internet longs, Semi longs, Biotech longs and Telecom longs. I did not trade in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was positive today as the advance/decline line finished higher, almost every sector rose and volume was above average. Measures of investor anxiety were elevated once again into the close. Today's overall market action was very bullish as the major averages reversed early losses sharply on heavy volume. Many market leading stocks finished near session highs. Tech stocks did especially well today. Even at the lows, many tech leaders were just barely down and some were even higher. The fact that the Broker/Dealer Index finished 1.34% higher, near session highs is also a big positive. Oil is only $0.23 higher despite the reversal in stocks. Some believe that when refiners come back online it will result in more demand for oil and thus, higher prices. I see the opposite as gasoline has been propping up oil and U.S. oil inventories are still at multiyear highs. As more gasoline is produced and inventories surge, I expect even more downward pressure on oil. Nikkei futures are indicating a flat open in Japan. I would like to see emerging markets stabilize tonight before shifting market exposure further.

http://hedgefundmgr.blogspot.com/
 
The lower we go the more Bullish I get! Sell when they are yelling, and buy when they are crying!

Robo


Stocks Higher into Final Hour on Heavy Volume Reversal.

Remmember last year during the significant June/July market bottom we were told by the permabears that we had begun another bear market or resumed the secular downtrend that they believed still existed. During that period, the chief concern was the conflict between Hezbollah and Israel. Take a look at this chart from Google Trends of the blow-off top in the use of the word Hezbollah. The peak came on July 17, one day before the U.S. stock market bottomed on July 18 and began ripping higher for months. Currently, subprime mortgages are investors' chief concern. Now look at the chart of the word "subprime." Maybe this time will be different, but if the word "subpime"
were a stock, I would begin shorting it very soon. The CBOE total put/call is currently 1.75. It hit 1.88 earlier today, which is a very elevated level. To put that in perspective, it only exceeded this level once during the entire 2000-2003 market meltdown, which was one of the worst in U.S. history. I sense, once again, that investors have priced in the worst-case scenario rather than the most likely scenerio for U.S. stocks. This has been a hallmark characteristic of the current “negativity bubble.” I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting, less concern over the I-Banking sector and short-covering.


http://hedgefundmgr.blogspot.com/
 
Todd Market Forecast Stock Market Update for Wednesday 03/14/07


www.toddmarketforecast.com

Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.

DOW + 57 on 650 net advances


NASDAQ COMP. + 21 on 200 net advances


SHORT TERM TREND Bullish

INTERMEDIATE TERM TREND Bullish


Editor’s note. We will be speaking at the Wealth Expo in Atlanta, GA
this weekend. Anyone wishing to attend can sign up at
www.thewealthexpo.com.

STOCK MARKET ANALYSIS:

We were quite pleased with the final result on Wednesday. We
thought there was a good chance for the market to hold the closing lows
of March 5, but when the Dow was down 135 points intra day, we strongly
considered hiding under the bed.
As it turned out, the lows did hold and what we ended up with was a
high volume reversal. There are no guarantees in this business, but that
normally has bullish implications for the next several weeks. The next
task for this market is to close above the levels of March 12. This will
give us a pattern of ascending highs and ascending lows or an upward zig
zag on the daily charts.
We noticed another interesting point today. The EEM which is the
ETF for emerging markets shows good relative strength versus the S&P
500. It didn’t come close to its March 5 low. Upon further
investigation, we found to our surprise, that the EEM tends to lead the
S&P.

NEWS AND FUNDAMENTALS:

The current account deficit was $195.9 Billion, less than the
consensus $203.5 Billion. The import price index rose 0.2%. the
expectation was for an increase of 0.8%. On Thursday, there is a data
dump. We get the producer price index, the Empire State Index and the
Philly Fed Index.
On the stock front, Aaon, Eddie Bauer Holdings and Gymboree rose
13%, 4% and 9% on earnings. Corn Products was upgraded by Deutsche Bank
and gained 4%.
On the negative side, Audio Codes guided lower and tumbled 22%.
Clean Harbors and J. Crew dropped 7% and 3% on earnings.

BOTTOM LINE:

Our S&P and NASDAQ intermediate term systems are on a buy signal.
Mutual fund investors should be in a 100% invested position.

Short term ETF traders are in cash. On Thursday buy the Russell 2000
ETF, symbol IWM at the market if there are more advancing issues than
declining ones on the NYSE at 10:15 New York time. Place a stop at
75.50.

OTHER MARKETS

We are on a buy for bonds as of January 31.

We are on a sell on the dollar and a buy for the Euro as of Feb. 15.

We are on a sell for gold as of March 2nd.

We are on a sell for crude oil as of March 12.

We are bullish for all major world markets, including those of the U.S.,
Britain, Canada, Germany, France and Japan.

http://www.decisionpoint.com/TAC/TODD.html
 
After today there will only be a few members left to graze in the pasture - we like that don't we Ferdinand. The fewer the better. Boss, you sure we shouldn't join them - to late, no room left. Why bother, we are right to sit tight.
 
Saturday, March 17, 2007

Fear Equals Buying Opportunity
Our option fear gauges continue to show extremes present despite last week's bounce. In fact, the level of fear in the market at this time is similar to levels it has reached at significant bottoms in the past.

The stock market retested its correction lows last week and soared away from them with flying colors, proving once again that, over a long time horizon, it's the bulls who make money while the bears end up living under bridges. Yes, over the short run, the attraction of a quick profit on a volatile dip sets the bears' eyes gleaming with greed. But, over the long run, the bulls get to enjoy the fact that dips are the stock market equivalent of a clearance sale, allowing them to buy at a discount for the longer term uptrend.

No, this doesn't mean the correction is over. This might be the halfway point, or less. But, that doesn't make us bearish at all (after all, we warned of a coming correction, and were quick to liquidate to build up cash reserves knowing this correction was coming). It simply says we have substantial and immediate profit opportunities ahead to put that cash to work and buy while stocks are on sale. These dips are buying opportunities in a long term uptrend.

Friday's market continued to hobble along under the grip of Quadruple Witching Day, not able to find a real trend to hang its hat on:

It won't be too long before the market is hitting new highs. There's plenty of solid evidence that says that's the likely course for the market.

http://marketclues.blogspot.com/
 
S&P SPDRS (AMEX: SPY) Reverse At Support
March 19, 2007

The exchange-traded fund S&P Depositary Receipts SPDRs (AMEX: SPY) may have complete a 3 Wave ABC corrective pattern. The lows, reached intra-day last Wednesday, also reached the Fib 38.2% retracement support level at the same time.

Two potentially bullish patterns indicate the odds are good for a bullish trade here. Even better is the close sell-stop which could be placed just below last Wednesday’s lows at about $136.00. If the SPDRs close above $141.42 in coming days, the prior March 9 th intra-day highs, it would add to the bullish potential of this trade.

Fibtimer.com (http://www.fibtimer.com) holds a position in SPDRS in its ETF Timer Portfolio.
 
The Long and the Short of Down-Market Investing
by Ben Stein



Posted on Friday, March 16, 2007, 12:00AM
I was going to write about how to give a good job interview, and maybe I will someday soon. But right now I'm moved by the stock market's continued gyrations downward to say a few deathless words on that subject.

In brief, be of good cheer.

A Bank or a Casino?


Let me explain a few basic things about the stock market. It exists for a variety of reasons. For one thing, it allows entrepreneurs and established companies to raise money for factories and laboratories and mills and mines.


It also allows small and large investors like you and me to purchase stocks to place long-term bets on the economy. We buy into America's industrial growth, and help it propel us into retirement and prosperity. The stock market allows this.


But the stock market is also a vast casino for the people who work in it. They play feverishly, trying to make a dollar or two (or a million or a billion) via short-term trades. They sell short, buy and sell options, use trades so complex they break computers -- all to make a quick buck.


In particular, they can make money by selling short and using "sell programs." These allow traders to make money as markets fall, just as we long-term investors make money by holding on for the long run.


Take Advantage of the Sale


These trades should be totally irrelevant to us long-term investors, except for one thing: Sometimes, when the traders and gunslingers drive down the price, they give us a chance to buy into long-term growth on the cheap.


As I've said before, if the market sells itself down a few percent or more, why not take advantage of the sale the same way you would a sale on paper towels or a washing machine? It's the same market, and eventually the traders will decide to start their manipulations to make the market go up. And there we'll be, with our stocks.


Ultimately, when the trading frenzies die down, stocks are priced according to earnings and interest rates, not according to who has the quickest finger on the sell-program trigger. And again, there we'll be with our stocks. (I learned this from Warren Buffett, so it has to be true... and it is true.)


Now, here's a key point: When the markets go nuts and traders sell short and trigger sell programs, they don't ever just say, "Hey, we're doing this to make a fast buck and profit from fear." They always have some supposedly legitimate, "statesmanlike" reason.


Barely Blip-worthy


Today, the reason is supposedly terror in the subprime mortgage market. To put this as frankly as possible, this is just nonsense.


Even if subprime delinquencies and defaults are up, they're a tiny portion of total mortgages. Suppose 13 percent of subprime mortgages are in default. Subprime itself is less than 15 percent of total mortgage debt, so that means that roughly 2 percent of mortgage debt is delinquent or in default.


Yes, that's more than it used to be, and is a disaster for the subprime mortgage companies.


But when a mortgage defaults, the lender takes back the house or condo, sells it, and usually recovers about 75 percent of the loan value or more. That means the real loss would be about 25 percent of 2 percent, or 1/2 of 1 percent.


In the context of a market as huge as the nation's mortgage market, that's not a lot. A few companies will go bankrupt, and someone will make a killing buying their bonds and portfolios at a huge discount as they turn out to be worth a lot more than people thought in March 2007. But it won't mean a lot to a roughly $14 trillion economy, of which the subprime mortgage market is a tiny blip.


Buy and Hang On


It's all a fig leaf for unscrupulous traders to spook other traders and try to scalp them. Please don't let it scare you. Keep holding on, and add to broad indexes like the SPY and the VTI.


There's also the supposed terror of a tiny rise -- .25 percent -- in Japanese interest rates. This will make speculators' easy-money-borrowing in Japan and subsequent re-lending in New York at a much higher rate a tiny little bit more difficult. But you and I have nothing to do with the carry trade, and the carry trade has nothing to do with the long-run level of the stock market.


Meanwhile, the economy is strong. Employment is very, very strong, and corporate profits are great. It's a good time to buy -- especially because traders and speculators have driven prices down.


That's good news for you, if you're patient. I know this is counterintuitive; it always feels a lot better to buy when the market is going up. But you make more money buying when the market is going down. Let the traders and gunslingers kill each other. Buy when it's low and just be happy -- and, as always, be patient.

http://finance.yahoo.com/expert/article/yourlife/26744
 
That was a good read, Robo.

The DJUA is now only ten points away from its' previous all time high at 493.71. The topping pattern of the market starts with the Utilities, then Transports, and finally Industrials. Which means the reverse could also be a truism. The Transports are waiting on the Fedex release on Wednesday.
 
Birchtree,

I follow Ben on Fox Bulls and Bears. Bob, Henry, and Todd are also not afraid of the Three Bears.
 
"Shaking off turbulence in global markets, investors added some $110 billion into stock and bond mutual funds in the opening two months of 2007, a record for any January-February period, investment researcher Strategic Insight reported Monday. Even though stocks prices have been very volatile, the numbers show that we're probably going to need to see a lot greater decline in stocks before investment sentiment tiurns significantly lower".

http://www.marketwatch.com Fundwatch by Murray Colemin.
 
Peaches,

At 100% C fund you can't get any deeper unless you step outside and add margin. Welcome to the pasture. Try not to make too much noise - we don't want to wake the chickadees that are comfortable sitting high up on the G branches. Of course, now you have to pay a wee more to play.
 
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