Bullitt's Account Talk

[Bullitt]

I found it interesting that the SPX only went down to 1316 yesterday. Maybe the smart money is figuring anything below 1315 is due to the Rogue Trader at Societe and is considered to be an 'artificial low'. Best showing of volume the market has seen all week, and it was to the upside. Acc days are still outnumbering the Dist days so I have to think somebody is buying.

I was surprised at CSCO's intra-day bounce back. I noticed the stock got trashed at the open but finished higher than the prior day. Uptrend mentioned Wally World's (WMT) rally on 0 earnings. Again, somebody important must have taken these calls in a positive light because the day's activity sure didn't reflect the negatives.

Speaking of that trader, I see he actually made the bank a couple billion dollars in 2007. Unfortunately... or fortunately, his wheels began to fall off right at the start of 2008.

 

[robo]

I found it interesting that the SPX only went down to 1316 yesterday. Maybe the smart money is figuring anything below 1315 is due to the Rogue Trader at Societe and is considered to be an 'artificial low'. Best showing of volume the market has seen all week, and it was to the upside. Acc days are still outnumbering the Dist days so I have to think somebody is buying.

I was surprised at CSCO's intra-day bounce back. I noticed the stock got trashed at the open but finished higher than the prior day. Uptrend mentioned Wally World's (WMT) rally on 0 earnings. Again, somebody important must have taken these calls in a positive light because the day's activity sure didn't reflect the negatives.

Speaking of that trader, I see he actually made the bank a couple billion dollars in 2007. Unfortunately... or fortunately, his wheels began to fall off right at the start of 2008.

Bullitt,

I agree. Many are watching the Fib 78.6% level. If it holds it's very Birchtreeish. I mean Bullish!

Robo


Comments from a TA:

The decline on Wednesday (of the prior week) reached the Fib 78.6% retracement of the entire gain achieved since June 2006. Although this level marks a huge selloff, the fact that the markets reversed at strong support is bullish..


Support remains at SPX 1296. Resistance is at SPX 1395 and then SPX 1425.

 

[Bullitt]

It's looking like the market has run out of sellers. There isn't a good enough catalyst at this point for the buying to act as anything more than support, but I can wait. I think the market has priced a recession in already as bad news hasn't taken things down as hard as a month ago. The stock market is not a measure of the current state of the US economy, it's too forward looking.

It wouldn't take much for a few big sellers to push the S&P 500 below 1315 with volume being this low. The market is basing, readying itself for the next push.

 

[Oldcoin]

WFBIX - F Fund (?)

Hey Silverbird, I’ve blown it when it comes to the F Fund. I wasn’t tracking it and missed some great opportunities to make some profit. You would think that with only 5 accounts it would be on the radar, but with it being in the dumps for so long I just didn’t look at it as a viable move. So I don’t know what its symbol is at stockcharts.

 

[presskh]

Hey Silverbird, I’ve blown it when it comes to the F Fund. I wasn’t tracking it and missed some great opportunities to make some profit. You would think that with only 5 accounts it would be on the radar, but with it being in the dumps for so long I just didn’t look at it as a viable move. So I don’t know what its symbol is at stockcharts.

The tracker fund is the ishares Lehman Aggregate Bond Fund (symbol: AGG)

 

[Bullitt]

Those that read my posts have probably realized by now that I tend to err to the bullish side of things when it comes to investing. That doesn't mean I limit myself to the bullish buy side analysts because they never seem to provide insight as to which way the market is heading in the near term.
One of my favorite personal indicators is to keep track of what newsletters/fund managers/analysts have begun to change their stance from bearish towards bullish. Dennis Gartman has been bearish stocks and bullish commodities for some time until recently when he made a comment that he doesn't see much more upside in Gold.

Doug Kass, who has been bearish equities since that drop about a year ago in Feb 2007, is currently "nervous about being too short." He advised readers the first week of Feb 2008 that the negatives only slightly outweigh the positives. I like the note he makes about market sentiment.

http://www.thestreet.com/story/10402847/1/kass-color-me-more-bullish.html

The market is running low on sellers, with plenty of formerly bearish folk who are mighty nervous about the technical setup and government interventions as of late. Still haven't made any changes to TSP allocation in 2008. If I see a need to make any moves, they will be reflected in the auto tracker.

 

[Bullitt]

One of my mentors speaks:

"This year January started rough. So what? Despite folklore, history shows January market movements foretell nothing about the rest of the year. With big stocks continuing strong and weak ones getting squeezed we could see a bifurcated market in 2008. Don't be surprised if the biggest stocks do well while indexes of small stocks like the Russell 2000 do badly. This contrast will drive technical analysts nuts because they are trained to hate markets where there are more decliners than gainers. Ignore the technical analysts."

http://www.forbes.com/columnists/free_forbes/2008/0225/108.html

 

[Birchtree]

I hope my GE position goes up 39%. This reminds me of the time I bought GT many years ago at $16 and like a fool sold at around $21. I put my daughter in with an account she had for college at $19 and she rode it to $96 and held for a 2 for 1 split. After the split it dropped to about $35 and I bought back in at that price and rode to $60 at which point we both got out. GT today is at $27 and I'm rather tempted to go again.

 

[Boxholder]

I hope my GE position goes up 39%. This reminds me of the time I bought GT many years ago at $16 and like a fool sold at around $21. I put my daughter in with an account she had for college at $19 and she rode it to $96 and held for a 2 for 1 split. After the split it dropped to about $35 and I bought back in at that price and rode to $60 at which point we both got out. GT today is at $27 and I'm rather tempted to go again.

I'll settle for half of 39%! GE was one of the first stocks I bought. In 1992 I bought 300 shares for about $5000. I haven't added or taken from it over the years and look forward to every dividend. It's split 2:1 three times (last in 2000, I think), reached about $60 before falling all the way down to about $23. It has clawed it's way up to $35 but has been hovering there for 2 years now. I think in today's market with the credit crisis the way it is, GE has more potential than any stock I know of. When this market does settle down, I hope to see GE heading Northeast at a 45 degree angle like it did when I bought it 15 years ago, but if it doesn't, it'll have to go way down before I get rid of mine. I've hung on to it the last 5 years because of the dividend, but would love to see it split one more time in my lifetime. Just out of curiosity, does your dog have any premonitions about GE?

 

[Birchtree]

Sorry I don't currently own a dog but I do have a Tonkinese cat named Mindy Lou and she has developed her own system. She thinks that GE is the quintessential (her own words) global company and is primed to do very well. She says these last few years should be viewed as a base building period before the next leg up. They will pay their next dividend on 4/26. I've owned it myself since 7/02 and those dividend hits really look nice on my statement. I know a nurse that used to work in one of their plants back in 1963 and she was given 3 shares in a retirement plan - she left the plant but kept the shares which about ten years ago was up to 300 shares.

 

[Boxholder]

Sorry I don't currently own a dog but I do have a Tonkinese cat named Mindy Lou and she has developed her own system. She thinks that GE is the quintessential (her own words) global company and is primed to do very well. She says these last few years should be viewed as a base building period before the next leg up. They will pay their next dividend on 4/26. I've owned it myself since 7/02 and those dividend hits really look nice on my statement. I know a nurse that used to work in one of their plants back in 1963 and she was given 3 shares in a retirement plan - she left the plant but kept the shares which about ten years ago was up to 300 shares.

Birch...Sincere apologies to Mindy Lou for calling her a dog. I now feel a certain connection to Mindy since she is Tonkanese and because I have been the owner of all kinds of Tonka toys since I was a wee little tad.
Concerning GT, I own a little bit of stock in one of GT's competitors, CTB. Haven't had it but about a year and a half, but long enough to find out that the price of oil has a lot to do with tire manufacturing and thus pricing. Cooper has raised prices twice in the past year, 5% and 4%, supposedly because of the rising price of some oil ingredient used in making rubber tires. If we get to $150 oil, which I believe is possible, I can see being on the freeway a much more dangerous place than we know it today because everyone is going to drive til the steel comes through before replacing tires. For that reason I plan to sell Cooper as soon as the time seems right. It just doesn't seem to me that the higher prices charged for tires has led to higher profits for manufacturers. But on the other hand, if you believe oil is headed for the $50 range, I would be a buyer of GT. Maybe Mindy Lou could give you her opinion.

 

[Birchtree]

I checked with Mindy Lou and she said she would actually prefer Hormel over Cooper Tire - finicky she can be sometimes. She said Goodyear just turned a profit in the Q4 with increasing sales and it's so low now that even Spaf would be interested since he likes noodling. They seem to be doing well in the export market. I'm ready for another run at it myself.

 

[Bullitt]

Doesn't look like the street cares too much about that little uptrend from the Jan 23rd lows enough to be buying aggressively at the lower end of the range. I think chartists are still waiting for that 'W' type double bottom pattern formation before they begin to support the case for a market bottom. The Fed will try to be there the entire way to catch the fall.

I always find it funny to see what piece of news the media reports in order to conveniently explain the reason for the move up or down in the stock market. I guess today oil traded for over 1 Hundo and the market sold off. Hmmm. I'd like to see what that ISE measurement read after 2:30 today.

 

[Bullitt]

I've been very speculative of this alleged pennant formation for a few reasons.

1. Everybody who owns at least one share of stock is watching it.
2. Everybody expects it to break to the downside.
3. The more people to recognize a trend in the market only makes the 'trend' more vulnerable to exploitation.

It's been about a month since this market has seen a good bear trap. Great job on the part of the analysts recommending that investors sell their bank stocks today and bringing on a false panic. Then again, who listens to analysts anyway.

Anybody buy any puts today?

 

[robo]

I've been very speculative of this alleged pennant formation for a few reasons.

1. Everybody who owns at least one share of stock is watching it.
2. Everybody expects it to break to the downside.
3. The more people to recognize a trend in the market only makes the 'trend' more vulnerable to exploitation.

It's been about a month since this market has seen a good bear trap. Great job on the part of the analysts recommending that investors sell their bank stocks today and bringing on a false panic. Then again, who listens to analysts anyway.

Anybody buy any puts today?

Bullitt,

Jason at Sentiment trader is about the only service around that goes over the history of this kind of data. I have his service because I enjoy reading over this kind of data and then watching what the market actually does. He commented today; that the current setup has got to be one of the most-written-about patterns in recent memory on messages boards, email lists and blogs.


The bottom line was - while there is most often some short-term follow-through in the direction of the break, that short-term move is usually a "false" move that leads to a longer-term move in the opposite direction. He also commented that he would not read anything special about our long-term prospects if we break down out of this triangle. Of course you must sign up for his service to get all the facts, but he did cover it. It will be interesting again to see the final results.

http://www.sentimentrader.com/


Oh, no puts, but I was buying the dip and was pretty happy about the rally at the end of day. Just dumb luck, no Voodoo charts... A gap up Monday and I'm taking some sweet profits. Man I like buying in the low 1330's and selling in the 1350's...

Take care! Email coming your way...

 

[Bullitt]

the current setup has got to be one of the most-written-about patterns in recent memory on messages boards, email lists and blogs.

Good times Robo, it's always appreciated.

Maybe that false break to the downside that the sentimenttrader was talking about came today. I don't know. Actually, nobody is going to know until we can see it in the rearview mirror.

TA's all expect that there's going to be a convenient touch and go in the 1275-1300 area. The reality is, if we happen to challenge those lows the same TA's will probably be calling for the market to go even lower anyway.

Love it or hate it, the market doesn't care. If this Ambac bailout is for real, we could see a good IT market rally on our hands. The bad news always comes out at the bottom and the Bears have had a tough time taking the market lower this past week.

The Market will be out of the recession before the US Economy will.

 

[robo]

And so, the wedge theory goes on!

The chart of the S&P 500 ($SPX) has tightened down into a small range, at the end of another tightening formation -- a "wedge" of sort.


http://www.redoption.com/commentary/462/

 

[Bullitt]

Dow theory remains squarely in the bearish camp until it breaks it's recent highs. I have a feeling it's going to be a while until the DJIA breaks thru 14,164 triggering a buy. The DJTA is currently moving sideways, literally, on weak volume. Some buying pressure, but not enough enthusiasm to move it higher.

In my 'trading' account, I've managed to add a few shares to some of my individual stocks but I don't plan on doing any additional stock buying any time soon. Anybody currently short this market is not making a good bet IMO. Remember that the end of the month tends to bring in a small rally as Mutual Funds and other Institutions add money to the market.

Currently building a good cash base in my trading account, for I have a feeling this bull will get a good chance to go short soon enough. Until then, I'm expecting a sharp rally ahead based on short covering, institutional money flows, surprise economic reports, and the breakouts from whatever chart pattern we currently reside.

Up days in XLF are looking better than the down days even though it's currently basing.

Still holding on in TSP and don't see a reason to make any allocation changes at this point.

 

[Bullitt]

From Today's Journal. I liked this article, for I was beginning to think maybe I was the only one going mad over the commodity bubble. These charts remind me of tech, shipping index stocks...

Hey Robo, I remember a few magazines were recommending that investors buy gold and other commodities such as grain/sugar/oil. Not a good arena for the retail investor to venture in to as most of these guys are 'in the know'. Same story every time.... Stairs up, elevator down.


-"People are wondering where they should put their money. Treasury bonds are overpriced, they're scared to death about equities, and they're even afraid of money markets," says Shawn Rubin, a senior adviser at Smith Barney. "So everybody is asking about commodities."

Bubble Worries

The price run-ups are leading some analysts to declare bubbles in the hottest markets. That raises the prospect that some commodity prices could come tumbling back down as rapidly as they have risen if they aren't underpinned by genuine demand.

"As an economist it's hard for me to sit here and look at corn and bean and wheat prices and explain it with fundamentals," says Dan Basse, president of AgResource, an agriculture market-research company in Chicago. "The market would suggest we're extremely overpriced," he says.

Others also say the prices have risen too quickly recently. "Looking at commodity prices you would think the global economy was poised to break all previous records of strong growth," wrote Marco Annunziata, chief economist at UniCredit on Wednesday.

www.wsj.com

 

[Bullitt]

I did say once before that I laugh every time Warren Buffet speaks. Sometimes I laugh with him, such as the time when I read this quote by him below.

"If you buy a farm as an investment, do you sit there and watch the Farm Channel on television all day, as they tell you corn went up a penny or something like that? You buy the farm and figure it is a good investment over a period of time."