Bull Pen - Fall 2006

[mlk_man]

Looks like another down day for US stocks. If that holds, and its 2 in a row, it will be tempting to jump in before deadline today looking for a rebound. But remember: attention right now is on the housing market and existing home sales will be announced at 10 am Monday morning. If that number comes in low, it will be a black day. If it is a little high, we might get a real nice relief rally.

So, do you feel lucky??

I'm not feeling all warm and fuzzy about report. Lot of for sale signs around here. On the other hand, the Fed did stop raising rates what, a month or two ago? So this may have given people the incentive to start buying again so we may get a pleasant surprise today.

Personally, I still feel today will be up or flat.

 

[FundSurfer]

Thanks for the G-fund calc info. I was never sure if you count the weekends or not. Did you back test the 6 day formula?

Yes. Like I said in the post, the only time there is any doubt is when it gets close to the stutter that has been happening every 9 weeks. I expect it to shift to every 8 weeks at some point and will not know till it actually happens.

 

[FundSurfer]

I'm not feeling all warm and fuzzy about report.

Long term interest rates have dropped again. Of course they dropped because there are fewer people buying houses. It'll probably take a couple months to have an effect.

 

[FundSurfer]

What prices would you use for the SPX, DWCP and the EFA for the bottom of the channel?

I'll put it in terms of the fund prices themselves. For the I-fund, a drop below $19.80 would probably send me to the exit. For the S-fund, I'm expecting a pullback to $16.9, at which time I'd be looking to buy once the fund showed signs of turn around. I'm not in the fund right now and if it continued to drop, I'd not buy back in till it showed signs of life. At to the C-fund, I'm expecting a short term pullback to $14.35ish. At that time I'd be looking to buy once it showed signs of green. Since I do look at the channels, these numbers increase as the funds move laterally.

 

[Griffin]

I'll put it in terms of the fund prices themselves. For the I-fund, a drop below $19.80 would probably send me to the exit. For the S-fund, I'm expecting a pullback to $16.9, at which time I'd be looking to buy once the fund showed signs of turn around. I'm not in the fund right now and if it continued to drop, I'd not buy back in till it showed signs of life. At to the C-fund, I'm expecting a short term pullback to $14.35ish. At that time I'd be looking to buy once it showed signs of green. Since I do look at the channels, these numbers increase as the funds move laterally.

If these numbers represent channel bottoms then you are using a shorter term channel then I am. Over time my stops will migrate up, for the same reason.

Based on what your saying, the I fund is going to bottom out today and set us for a possible rally on Monday.

The only problem I have with using the Funds themselves for analysis, is that you only capture end of day data, instead of the intraday data. Since the funds rarely end on a days high or low, the channels represented by the funds themselves are slightly narrower then those of the represented index funds. I don't disagree with your method, it is certainly is very effective. However, this is probably why you and I tend to occassionally differ by a day on our moves.

I back tested your G-fund theory and I am impressed. Thanks, I'm throwing away the crystal ball.

I am going to change or abandon my IFT. I'm going to wait until near noon to make the call.

 

[FundSurfer]

The only problem I have with using the Funds themselves for analysis, is that you only capture end of day data, instead of the intraday data. Since the funds rarely end on a days high or low, the channels represented by the funds themselves are slightly narrower then those of the represented index funds. I don't disagree with your method, it is certainly is very effective. However, this is probably why you and I tend to occassionally differ by a day on our moves.

I have found that using the funds makes me a little more conservative which I think is a good thing given that our moves are restricted to daily.

 

[Griffin]

I have found that using the funds makes me a little more conservative which I think is a good thing given that our moves are restricted to daily.

The approach I was taking was more conservative then yours, I missed two good rally's recently being too conservative. I went back and rechecked the volume on the Dow, and yesterday was not as light as I thought it was going to be (it stayed up throughout the day) and today is in line with yesterday. This leads me to believe that we are seeing the bulk of the selling pressure out there. The Nikkei and the FTSE appear to have found support forming a nice bottom.

I appreciate the exchange, this was a good learning experience, for me. I see Ebb is going into the I today.

Cancelling my IFT and staying in the I.

 

[FundSurfer]

I see Ebb is going into the I today.

Yep, I think he may have played this move perfectly. Time will tell.

 

[Birchtree]

If the BEARS don't do something in here right now - the potential for the upside would be head spinning. A pause would probably be very healthy - but I don't think a serious correction is at hand, instead we are headed to new all-time highs.

 

[The_Technician]

I back tested your G-fund theory and I am impressed. Thanks, I'm throwing away the crystal ball.

Please do on my account....smart a$$ ...

 

[Griffin]

Please do on my account....smart a$$...

I think you need to check out what FS did, it is very effective, but like every system that has been proposed on this site to track the G, it has it's misfires. Everyone has been trying to develop some linear method of determing the G, but it is based on an interest rate, probably something to do with the Fed fund rate, and therefore fluctuates, as well as having a growth component. Don't get too bent out of shape, you made a lot of good calls, no need to get [edit].

 

[tsptalk]

Thanks for the cleanup Spaf.

Rules Reminder:

5. Watch your language in general, though a bit of occasional adult language is understood, though not encouraged.

12. Do not annoy the moderator(s) or administrator.

 

[Birchtree]

From Dr. Doom Marc Faber - "If the market breaks to the upside you could have quite a violent rise in stock prices because the hedge fund community and the investors by and large are underweight equities compared to where they were in May." He especially likes large caps and technology NDX stocks.

 

[Birchtree]

A few words of wisdom. It is the secular bear market that creates the long-term returns enjoyed by stock market investors. The secular bull market merely harvests them. It is looking more and more to me that the October'02 lows were the culmination of a cyclical bear market, not a secular bear market like all the pundits say. 0% bulls they say - it must be classic. What I means is not the beginning of a secular bear market. Not some damn thing that will run on for years. We are in a mega trend secular bull market. I really like saying that. Snort.

 

[Griffin]

After sitting in the I all week waiting for the dollar to drop, I finally sauntered over to the G, without the last few tenth's of a percent that I needed to hold on to a top 3 monthly return spot.

Oh well, new month....game on.

I would be suprised to see the market continue to move up much more from here and I am expecting some downward action this week. Being the first trading day of the month, I expect the market to come out of the chute to the positive and climbe the wall through the morning. I'm not taking the bait if that happens - I think it will be a bull trap. I'm am considering a move to the F-fund later this week and I will probably make the move on the second day of a sell off.

Overall, I'm looking for a consolidation, followed by a couple of days to the upside early next week and then a pullback as the election cycle heats up. I expect this week to be a sleeper.

 

[Birchtree]

Mostly everyone is concerned about the potential bull trap that could be in waiting - this is classic bull market revenge - keep everyone off guard. But there will be the reward of atonement for those adventurous enough to ride the risk escalator. I want mine.

 

[TRAFFIC_DOG]

Mostly everyone is concerned about the potential bull trap that could be in waiting - this is classic bull market revenge - keep everyone off guard. But there will be the reward of atonement for those adventurous enough to ride the risk escalator. I want mine.

Actually, most everyone you chase around the board is concerned about OUTPERFORMING your beloved C FUND.

This means you must be out and back in at a better price at least once.

Most believe the market is going higher, so in reality the risk is being out.

You are the one who is risk averse, all the taunting not withstanding.

You and your thirty years plus of investing are smart enough to know the average year in , year out returns you can expect in large cap equities, especially with a healthy economy and a three year bear market base behind us. You will be satisfied with that return. It meets your goals/needs.

If I had say, 3 mil in the bank, 4.75% G Fund providing a risk free $142500 on top of my annuity might do it for me.That would satisfy MY goals/needs AT THAT TIME. Not now though, I want/need 10-15%.

I have to swallow hard sometimes moving my "super power account" money around to position it for the best risk vs reward. I believe there is a good likelihood that large cap equities may provide less than 10% per year over the next several years.

There are 4 escalators going here, three of which are going up AND down.
You have determined your time frame for getting to the top floor on your escalator of choice.

The truly brave souls zip up their packs, grind their spent butts under the heel of their boot and jump across to the unknown.

Keep up the the cheerleading though, you shake it pretty good and the pom poms are pretty.

 

[tsptalk]

I'm am considering a move to the F-fund later this week and I will probably make the move on the second day of a sell off

Hi Griffin, can you please explain what you meant by that? ...You will wait for stocks to pullback for a couple days before pulling out? Just curious because we talk a lot about being anticipatory or reactionary. My anticipatory moves have proven to keep me out of the end of several rallies. This sounds like you are more of a reactor (or is it reacter? I mean one who reacts, not nuclear reactor ).

OR... did you mean you will get into the F fund when they pull back?

Thanks!
Tom

 

[Griffin]

Hi Griffin, can you please explain what you meant by that? ...You will wait for stocks to pullback for a couple days before pulling out? Just curious because we talk a lot about being anticipatory or reactionary. My anticipatory moves have proven to keep me out of the end of several rallies. This sounds like you are more of a reactor (or is it reacter? I mean one who reacts, not nuclear reactor ).

OR... did you mean you will get into the F fund when they pull back?

Thanks!
Tom

Tom, I'm anticipating to react, how's that for a non sequitur . I am expecting the market to consolidate this week. Typically, the F-fund will move down the first day of any sell-off in the stock market. The F-Fund has been trending down the last few days and is now close to the point of turning around and making some gains.

My experience with this fund is that it typically is useless since it tends to have it's worst days when the stock market is dropping and it's best days when the market is making a significant rally. The only time that it really acts contrarian to the stock market is when the stock market is forming a bottom.

My strategy is to ride the stock funds up, wait for the market to consolidate in the G and when it starts to bottom move to the F. Then it's back into stocks for the next ride. Currently, I am in the G waiting for the consolidation. I'll be watching for a spike in the ten year note.

 

[Griffin]

Mostly everyone is concerned about the potential bull trap that could be in waiting - this is classic bull market revenge - keep everyone off guard. But there will be the reward of atonement for those adventurous enough to ride the risk escalator. I want mine.

Birch, I'm not quite sure what to make of TrafficDog's comment, I sense some irritation, the same irritation that many folks have commented on.

I have a game we can play - we'll call it "If I were Birchtree" (IIWB) - I will start a new thread for this game and post the rules when we get a few people to join in.

Here's a quick down and dirty - five-ten members pick one day each month to initiate a day of capital preservation, using the same rules we would use for a real account. Each move will be assumed to be a move from the C to the G and back again the next day. The premise being that if you did capital preservation just one day a month you could significantly beat the system. Therefore, we will crete 5-10 fictional accounts on one thread and use the C as the baseline, adding any capital preservation the players make or lose to the C-fund. I'll do the calc's.

The committment is for one year - interested in playing? PM me (anyone who's intereted). I'll provide the prize for the winner!

Birch, put your money where mouth is....the gauntlet is thrown