Bull Pen - Fall 2006

[Griffin]

Looks like Wal-mart is on deck to be the scapegoat for this artificial (?) rally. Will be watching the Dow components. They are:

SBC SBC Communications
GM General Motors
MO Altria
MRK Merck
VZ Verizon
JPM JP Morgan Chase
C Citigroup
DD DuPont
PFE Pfizer
GE General Electric
KO Coca-Cola
HON Honeywell
XOM ExxonMobil
BA Boeing
AA Alcoa
PG Procter & Gamble
JNJ Johnson & Johnson
MMM Minnesota Mining & Manufacturing
MCD McDonald's
CAT Caterpillar
HPQ Hewlett-Packard
INTC Intel
UTX United Technologies
MSFT Microsoft
WMT Wal-Mart
DIS Disney
AXP American Express
HD Home Depot
IBM International Business Machines
AIG American International Group

Here's a link:
http://finance.yahoo.com/q/cp?s=^DJI

 

[Birchtree]

The problem is inherent in Wal-Mart and not the retail sector. IT's going to be a good Holiday season this year.

 

[fedgolfer]

The problem is inherent in Wal-Mart and not the retail sector. IT's going to be a good Holiday season this year.

OMG, is Satan wearing a parka? Did I just see Birchy ooooglin' QQQQ instead of his beloved one? Ya sinner!

 

[Birchtree]

I think the C fund just saw a Skark down at 1332 - spring board right up out of that water. Gimme 1340 and we'll worry about tomorrow later.

 

[Birchtree]

Fedgolpher,

Alright I admit that some times I do lust in my heart and it's especially sexy when I wear my sweater. The peanuts are plenty this year - did you know that peanuts help hold back diabetes?

 

[fedgolfer]

Fedgolpher,

Alright I admit that some times I do lust in my heart and it's especially sexy when I wear my sweater. The peanuts are plenty this year - did you know that peanuts help hold back diabetes?

Was it the legs or rack of sexy XLK that made you wander? These are the questions you'll need to answer in confessional... while storing nuts for the winter.

 

[Griffin]

The Dow and S&P are holding even (i.e. the Dow is not running away from the S&P). Wal-mart is sitting on support and the overall conditions look positive. I would really like to see the S&P clear 1340 before I, IFT but that is unlikely. With the strong dollar index back up against resistance, the I-fund is looking real tasty, and if this does turn out to be a bump (in a "bump and run") a week or more in the I eliminates the FV frustration and the OSM indexs are not riding high in their channels, especially the Nikkei.

This is my last post for the day......If I move, it will be into the I.

 

[CopterDoc]

"ECB Decision
The euro weakened 0.4 percent to $1.2673 at 1 p.m. in Paris, slipping from a one-week high. Slowing growth may damp inflation, reducing the case for the ECB to keep raising rates into 2007.
Slowing growth in the U.S., the world's biggest economy and destination of one-fifth of European exports, is denting demand at some European companies. Service industries in the U.S. may have expanded at a slower pace last month and factory orders declined, economists forecast two reports to show today.
Still, the economists are nearly unanimous in predicting the ECB will raise its rate tomorrow to 3.25 percent from 3 percent and to 3.5 percent in December to contain inflation, according to a Bloomberg survey."
(Bloomberg) http://www.bloomberg.com/apps/news?pid=20601068&sid=aoYKf4UgAPWQ&refer=economy

 

[Griffin]

The Cup and Handle theory went up in a cloud of smoke....time to move on.....now I'm running with the Bump and Run theory.

So here the chart yesterday but in a one year view and with the top of the 1st half of the year's channel drawn in.

Assuming (uh. oh.) that this new channel persist's, it will intersect with the old channel about 1370 on the S&P, somewhere around 19-25 October. This is about the time that the new PPI data is released and the last couple of trading days going into the FOMC meeting.

I'm not suggesting something radical is going to happen at that time. This simply gives me a horizon for the next couple of weeks. I fully intend to stay 100% in stocks, but I may move around a little depending on the dollar.

I'll be in the I tonight (when we went positive this morning, I got suspicious that this bump would occur) and hopefully catch the interntional's response to today's action. I expect the domestics to be strongly positive for another day then level off. Following this, I will transition to domestics for the next ride - if the dollar looks right.

 

[Birchtree]

I have to wonder just how much more the shorts are going to be able to take, nothing is going their way and yet they hang on to the towel. And everyday more traders are not believing the current advancing price structure and standing aside and letting this move slip through their fingers in not chasing it.

 

[FUTURESTRADER]

Birchy,

Can you say sec-tor ro-ta-tion?

Kenny

 

[Griffin]

I don't know what to say about the S-Fund today. It is finally making it's big move. You can draw a very weak correlation with the existing channel, but for the most part, there is nothing that I can see that would trigger any real resistance.

I was real suprised to see the Euro weaken against the dollar after today's rate hike by the ECB. Maybe tomorrow will deliver the goods .

I'm not confident that I can out smart this market so I may have to break with tradition and do a 50/50 split on the S/I.

Don't call me a multi-fund trader yet, if I do this, I usually (it's been close to a year since I last split my account, usually is probably not the right word) will take advantage of a combination weak day with one and a strong day with the other to go back to a 100% fairly quickly.

We all have our pet peeves, mine is splitting the account .

 

[Birchtree]

Since the Technician does'nt seem to be around these days to offer his be careful rendition....I'll do it. The R2K is only 38.75 points away from its' May high which was a new all-time high. I would approach the S fund with some caution as we get close to the 781.83 level on R2K. There is transition in the air and this run up to the May high could primarily be a manifestation of short covering. I'm holding my small-cap fund (OTCFX) until at least January 07, then I plan to peel off shares in a disciplined approach and move primarily into the international fund (AEPGX). There are numerous reasons to be cautious but most folks won't listen to those reasons so I'll save my breath. But of course I could be all wrong so use your own due diligence - there is no magic carpet ride.

And the NYSE Composite is only 76.48 points away from a new all-time high. There will be more and more indexes that will confirm the BULL.

 

[Griffin]

With the extreme weakness in the Yen and Euro today. Were looking at a crushing day for the I-Fund. I am going to sit in the I today and ride out this currency wave. I will be setting my stops if this is the start of a pullback, but I am continuing to ride the bull as long as this channel stays intact.

I have been talking about the development of a new high growth channel forming. While I am still bullish and projecting this pattern to develop further, I am keeping in mind that the run up this week could be a precursor to a collapse of the channel of the last couple of months. It's hard to hang in when you se those charts drifting towards support, especially because they always seem to settle right down on top of them, until the deadline has passed.

Were not close to this point and the temptation is to run for cover.

Staying 100% in the I for now and hoping europe reacts like we do to a rate hike (whipsaw) in which case the gut reaction to yesterday's rate hike will reverse.

 

[Birchtree]

A rally in oil and mining stocks, merger and acquisition speculation and the absence of surprises from central bankers pushed European shares to five-year highs. The FTSE 100 index is now at or above the 6000 mark.

European stocks have been sharing an optimism that any slowdown in the world's economy won't come with a hard landing. This is partly because investors believe central banks haven't moved interest rates high enough to choke off investment, while still keeping inflation in check. The Bank of England left interest rates on hold at 4.25%; the European Central Bank lifted rates to 3.25% from 3%. Many strategists are still bullish on European markets. They believe that, compared with elsewhere in the world, the shares are relatively cheap and that corporate profitability remain high. What's not to like. Be right and sit tight.

 

[Griffin]

A rally in oil and mining stocks, merger and acquisition speculation and the absence of surprises from central bankers pushed European shares to five-year highs. The FTSE 100 index is now at or above the 6000 mark.

European stocks have been sharing an optimism that any slowdown in the world's economy won't come with a hard landing. This is partly because investors believe central banks haven't moved interest rates high enough to choke off investment, while still keeping inflation in check. The Bank of England left interest rates on hold at 4.25%; the European Central Bank lifted rates to 3.25% from 3%. Many strategists are still bullish on European markets. They believe that, compared with elsewhere in the world, the shares are relatively cheap and that corporate profitability remain high. What's not to like. Be right and sit tight.

Holy Moses Birch,

That's two comments in a row concerning the near term short strategy. I like it!

 

[Birchtree]

It should be noted that the Dow is not yet in the clear as the Dow currently trades at the top of the three-year trading channe. It won't be long though.

Third quarter earnings season is about to kick off. Analysts have slowly been lowering their S&P 500 earnings estimates, and the bottom-up forecast for the third quarter currently is 14.1% year to year. That's somewhat slower than the 16.3% for the second quarter. I'll be watching for more positive surprises now that retail has surprised to the upside.

 

[Birchtree]

Just last week, Federal Reserve Chairman Ben Bernanke said that the housing slowdown could lop a percentage point off economic growth in the fourth quarter, and hurt growth next year as well. Instead of suffering, the stock market cheered that news. Investors concluded that a percentage point here or there wouldn't hobble growth, and that the Fed meanwhile would see slowing growth as a reason to keep interest rates down. Low rates hold down costs for consumers and businesses alike, and that is good for stocks. Goldman Sachs is forecasting that a slumping housing market will force the Fed to cut its target short-term interest rayes by 1.25 percentage points to 4% next year, a prospect many stock investors welcome. You bet.

 

[Griffin]

I am still extremely bullish, but the F appears to be setting up for a nice day and I am hoping to catch a day of rest to buy into the S-fund. That will be a temporary move as my real target is to catch the I-fund during the US dollar index drop.

IFT to the F today, expect to initiate the move to the S tomorrow or Thursday.

 

[Griffin]

I'm am expecting a day maybe two to consolidate and maintain the short term channels, followed by another couple days of a strong rally.

My predicted bottoms and percent drops are as follow
DWCP (S-fund): -1.4% to 580
SPX (C-fund): -0.9% to 1340
EFA (I-fund): -1.0% to 67.5 (this is highly dependant upon what the dollar does)

I still see the dollar index sliding higher for another couple of days, so I'm still fixing to move to the S. The decision to make that move will depend on how quickly today approaches the mentioned targets if the market does not reverse itself from the direction the futures are currently indicating (down).

I moved to the F yesterday, because one of it's rare golden moments is in the works. There is a bit of room for the TNX to move upward to the top of the obvious channel (therefore driving the AGG (F-fund) down a bit). The F-fund move may not play out today, I would rather catch a good day in the F tomorrow, then get spanked tomorrow in the S. The other side of the coin, I do not want to be defensive and miss another rally.

So right about now, I have a picket up my rear end from sitting on the fence. The decision is between the S and F right now.