Bullitt's Account Talk

[robo]

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,


Some thoughts about the Gurus....


Robo


"Advice is the only commodity on the market where the supply always exceeds the demand."

- Unknown


"...if one tortures a dataset long enough, it will confess to anything!"

- Andrew Lo



"He who lives by the crystal ball soon learns to eat ground glass."

- Edgar Fiedler



"And it really doesn't matter if I'm wrong / I'm right..."

- Paul McCartney

http://www.cxoadvisory.com/gurus/Default.asp#snapshot

 

[robo]

Bullitt,

The Herd is very Bearish, the Blogs are Bearish, and the shorts are piling on. I have read the word crash often today. If the buyers are on strike next week we could test the lows, but if they return we are headed back up quickly as they put the squeeze on.

It's looking like more to the down side for now, but I'll hold my longs at these levels for now. Waiting to here from the Boyz on this matter this weekend. Henry, Bob, and Frank!

I might put a hedge on if things look like we could test-em next week and things did look ugly Friday....


I think I'll check with the Top Timers today and get some additional opinions.

Take Care!



Robo

 

[Bullitt]

Robo,

Sorry, but my IFT's aren't really going to help much in the day to day though I did begin getting the heck outta small caps at a good time in the later part of 2007!

At the very least a retest is coming. Where will the retest occur? We'll see how many of the pros walk the talk they were pumping from early February where they wanted to wait for a retest to buy. Louis Navellier was calling for an all out green light buy signal last week, but now he's advising that investors err to the side of caution. You mentioned a couple of magazine the indicators before. I keep hearing that now is a good time to buy commodities because the dollar isn't backed by anything real. I learned in 11th grade what 'In God We Trust' means.

I don't know where this idea in the link below originated from but a few guys I read daily had originally posted it right as the article came out. Regardless of the cover, most home builders are above their 50 DMA and represent a good entry point. Home builders began dropping around Juy 2005, well before the public began talking about the housing crunch. Hmmm.

http://seekingalpha.com/article/62823-magazine-cover-indicator-housing-bottom-in-place?source=feed

Yes, Friday was ugly, but I'm not too impressed by the volume on either side of ball the past 2 weeks. Oh, one more thing about the retest... that area below 1300 is almost ghost territory. Since that rogue trader caused what our guy is calling the capitulation days, I don't expect a drop below ~1300 unless something extremely unexpected and bad comes to light.

 

[robo]

Robo,


Yes, Friday was ugly, but I'm not too impressed by the volume on either side of ball the past 2 weeks. Oh, one more thing about the retest... that area below 1300 is almost ghost territory. Since that rogue trader caused what our guy is calling the capitulation days, I don't expect a drop below ~1300 unless something extremely unexpected and bad comes to light.

Bullitt,

I was reading over some stuff from Frank and he agrees with you on the 1300's,
( Fibonacci Support Levels 1318 .12 = 61.8% and 1296.96 = 78.6% )


He thinks we could be getting close to a do-or-die level. If we continue selling off it could push us into a bear market, but if we hold near current levels, we could see an explosive rally.

He did comment that his long-term strategy remains quite bearish and points out if you are not an aggressive trader you should be in cash. He doesn't agree with Henry and Bob, but he plays it by TA work only ( Fibs). As long as the 50 dma is below the 200 dma he will not give a buy signal for long-term conservative investors.

Critical support remains at SPX 1296.

Short-term support is at SPX 1318.

We could test these support levels next week, and maybe even Monday. I'll send you some Voodoo Fibonacci stuff!


The only reason I read and watch so much TA work is because so many other folks are buying and selling on this data. It's still all Voodoo to me!

Take Care....

 

[Corepuncher]

He did comment that his long-term strategy remains quite bearish and points out if you are not an aggressive trader you should be in cash. He doesn't agree with Henry and Bob, but he plays it by TA work only ( Fibs). As long as the 50 dma is below the 200 dma he will not give a buy signal for long-term conservative investors.

Critical support remains at SPX 1296.

Short-term support is at SPX 1318.

The only reason I read and watch so much TA work is because so many other folks are buying and selling on this data. It's still all Voodoo to me!

I agree that the sub 1300 area can almost be "glossed" over when you look at the charts, therefore, that 1320 ish is most key, IMO. The economic data is deteriorating, so I expect some more downside.

As far as everyone using the TA, the "pennant breakout" looks like it is in danger of reversing, which may cause some to lose faith in the TA for now, which could in turn accelerate us to the downside due to uncertainty.

My guess is that sometime between now and June will be the bottom...at least for a few months out. We have the stimulus coming out, which will make people feel euphoric. This COULD be rather fleeting though, especially if the numbers indicate people are not buying discretionary items as much as paying off bills.

Another thing to watch are oil prices. They are currently a rather dark cloud, and if the prediction of 4 dollar gas does not pan out and oil drops, it could help the upside.

All that said, I'll be looking for buying opportunities (which are coming soon I believe) to move out of G and into stocks. C and S I guess. I really would like to see < 1300-1320 before buying back in.

 

[robo]

I agree that the sub 1300 area can almost be "glossed" over when you look at the charts, therefore, that 1320 ish is most key, IMO. The economic data is deteriorating, so I expect some more downside.

As far as everyone using the TA, the "pennant breakout" looks like it is in danger of reversing, which may cause some to lose faith in the TA for now, which could in turn accelerate us to the downside due to uncertainty.

My guess is that sometime between now and June will be the bottom...at least for a few months out. We have the stimulus coming out, which will make people feel euphoric. This COULD be rather fleeting though, especially if the numbers indicate people are not buying discretionary items as much as paying off bills.

Another thing to watch are oil prices. They are currently a rather dark cloud, and if the prediction of 4 dollar gas does not pan out and oil drops, it could help the upside.

All that said, I'll be looking for buying opportunities (which are coming soon I believe) to move out of G and into stocks. C and S I guess. I really would like to see < 1300-1320 before buying back in.

Corepuncher,

We are very close to 1320 now. I went 100% long again in TSP Friday and I could be early again, but I will continue to go 100% long every time we get down into the 1330's... I will also continue to sell rallies for now. If critical support does fail @ 1296 Fib level, we could head deep down that rabbit hole.

Frank will issue a sell signal if 1296 fails. No emotion, pure Fib's.... However, until Henry and Bob give me a sell signal I will continue to buy the dips at these levels.


I'm positioned with an additional 300k in longs after Friday’s sell-off, so it will not be fun for me if 1296 fails. Only my friend Birchtree can find sweetness in more downside. For me it's PAIN!

I’m 60/30/10 in TSP C/S/2040. You might ask why 10% in 2040. The reason is I like to DCA into 2040 and move the C and S around. I’m surprised I haven’t gotten a letter yet. Plenty of moves this year.

Take Care!

 

[Birchtree]

Man I gave back $51K on Friday and was down $24K on the week - there ain't nothing sweet about that. I did however have six dividends hit on Friday and that was sweet but one heck of a sacrifice to get'em. There is a pattern that is constructive among the Dow stocks. A strong uptrend characterized by a recent breakout to new multi-year highs (October 9th) has been followed by holding within the vicinity of a longer term uptrend support line during the current market correction that began in late 2007. Also, the break above a six year down trend line and the completion of a two year base relative to the S&P 500 indicates that mega-cap multinationals are just beginning a secular bull market relative to the S&P 500. This is in reference to the Morgan Stanley Multi-national index (NFT). Always be weary of pauses in price pattern sequences where news is prevalent. We still have bottoms above bottoms patterns in both the NYSE breadth MCO and MCSUM along with a bullish divergence still intact. I think we may explode to the upside very darn soon.

 

[robo]

I think we may explode to the upside very darn soon.

Now that would be very sweet indeed my friend!

 

[Bullitt]

The economic data is deteriorating, so I expect some more downside.

As far as everyone using the TA, the "pennant breakout" looks like it is in danger of reversing, which may cause some to lose faith in the TA for now, which could in turn accelerate us to the downside due to uncertainty.

Another thing to watch are oil prices. They are currently a rather dark cloud, and if the prediction of 4 dollar gas does not pan out and oil drops, it could help the upside.

I really would like to see < 1300-1320 before buying back in.

Corepuncher,

Don't confuse the economy with the stock market. They are two totally different beasts. The economy is gauged by hindsight and the stock market is gauged by foresight. Stocks always look forward.

I would disregard that pennant formation. I'm sure the quant technicians at GS and the like have discovered a new pattern already.

It's going to be interesting to see how invetors react to the 1300 level. There should be some good volume as the folks who had the balls to buy on the 22nd and 23rd might bail to break even. That 1300 level might be touch and go this time. I think alot of the big investors were waiting for this double bottom scenario to confirm their belief that this truly is the bottom.

 

[Bullitt]

Robo and Birchtree,

I wish I had the same amount of ammunition you guys have to play with! As long as the MCO stays above -50, the case for the bulls stays intact. Moroney still says 11,900 has to hold in DJIA and is recommending cash until a trend develops. He tends to be more reactive in his buy and sell decisions so I'm not too crazy about his advice.

Money funds continue to swell as MM interest rates get lower and lower. I guess those running to cash can't say they aren't buying low!

 

[robo]

Robo and Birchtree,

I wish I had the same amount of ammunition you guys have to play with! As long as the MCO stays above -50, the case for the bulls stays intact. Moroney still says 11,900 has to hold in DJIA and is recommending cash until a trend develops. He tends to be more reactive in his buy and sell decisions so I'm not too crazy about his advice.

Money funds continue to swell as MM interest rates get lower and lower. I guess those running to cash can't say they aren't buying low!

Bullitt,

The herd thinks we are in a Bear Market and we are getting ready for a nasty Wave 5 thrust down the rabbit hole. Now, the herd could be correct, but normally they are incorrect.


As you pointed out plenty of big money wants to see a double bottom and for the 50 dma to get back above the 200 dma. It all sound so easy. If we do gap down Monday and it looks that way, and we get the double bottom test, it will be interesting to see if the institutional boyz do buy some as you mentioned.

Big short positions are being put on the Bear Market theory and that we starting the first of a very nasty wave 5. Also that we are headed deep into a Bear Market and maybe even a very deep recession or a depression depending on who you read. How much is priced into the Market we shall see soon.....

The drive by media are all mostly calling for the Last Days soon, this must be an election year. I guess if it really is the Doom and Gloom folks are talking about, I’ll just keep selling these Bear Market rallies and buying support until it fails. LOL

The crooks could surprise these folks and put one more ugly squeeze on them before they let it fall. We shall see!

When the selling stops and we hit bottom it's end game. Could it be 1300? Well, you know where my money is. I'm long and cautious, but long nonetheless.

Nikkei futures way down and the National Debt is now around 9 Trillion. How much is the interest on that bill? It's only around 250 Billion since interest rates are so low. Thanks Ben!
China holds around 600 Billion and Japan holds around 425 Billion.

I'm getting all this good information from a guest on Bob Brinker's show. We are in trouble if they don't get health care under control. Medicare is the scary one not Social Security....


Folks get Money Talk on Demand and listen to Bob's guest weekly. At 4.95 a month it's a bargain!!!


I'm watching Bloomberg live and down they go in Asia and so go the US futures.

 

[robo]

Bullitt,

I know it's ugly out there, but if the current low holds for now the bears could get another squeeze and I could get another 5% gain from a Bear market rally. Now I don't think we are in a Bear Market, but most folks at TSPtalk think we are. So when in Rome, speak Roman, or something like that. Anyway, the market could also sell-off and head to new lows, and put us in a Bear Market. The Bears are still in control, but we have had some nice news driven rallies.

So is tomorrow Turn-Around-Tuesday, or crash Tuesday? Flip a coin....


Now, just what is the low the herd is watching and waiting for? This is why I stopped by to ask you this question. Art from CNBS ensured me this morning it’s the panic low 1270. Think he’s short? I think so! Oh, you do know what the BS stands for in CNBS. Of course you do…

Back to the question about the low. Is it the Fib's 1318 and 1296, or the 1310 closing price or maybe it's the 1270 panic low. I already have my buy point and Bob and Henry have given this Master Sergeant his marching orders. For me being the Military man I’ am it’s Yes Sir, Yes Sir, buy-em until you’re full. When will the herd be happy about testing the lows? What if we already tested it and support is now 1320! NO WAY…. Some might think I'm just Bullish, but I like shorting rallies and also buying the dips. When we head into 1320's I'm buying. Looking for a rally to sell again.... At some point I will hold my longs and that time is getting closer folks. I'll continue to play this market both ways until it decides which way it wants to go and in the end I think up.

Any thoughts on this low the herd is waiting on. You probably don’t even care.

Take Care!

Used up the rest of my powder and went fully long with all remaining cash and bought SSO during the dip today. I think at a very nice price. I bought early Friday so this scales in nicely and I already have a gain from the lows today, but a loss from Friday. My point is I'm now 100% long which is rare for me.

Looking to sell some the next rally....

 

[Bullitt]

Well, for TSP purposes, you could potentially miss the bottom completely. At least with an ETF you can dive in at midday. TSP you get the NAV, so a 5 day run could make it tough to get back in where you wanted to. Hence, panic buying. Of course my TSP is on auto pilot so the buying pattern doesn't change. I've been doing some heavy lifting in my personal account since the Capitualation lows put in on 1/22 and 1/23.

As long as the Fed keeps their aggressive stance, I'm not worried about the market dumping. Unfortunately, they were late to getting on board cutting rates because of inflation worries but they're trying to make up for lost opportunity.

Dennis Gartman, perma bear, commodities trader, has been lightening up on his commodities... Allegedly. I'm looking for an ETF that shorts Silver.

The players who move the market don't care too much about the headlines regarding what kind of games Ambac and Countrywide are playing today. Could you imagine what would happen if another surprise rate cut or a .75 rate cut happens at the next FOMC? The media seems to think that we're doomed because in the current market turmoil, "This time, it's different." They just keep sucking 'em in.

Below: www.Marketgauge.com

 

[Corepuncher]

For some reason, I get the feeling that the first time we blast through 1320, it will probably end up in the upper 1200's intraday and bounce back to a positive close back above 1320. Then, it will get everyone excited, and we'll have another mini rally. If it's an intraday low, it will be extremely difficult to time with TSP.

Even if we do break 1300 and snap back, I bet it will just take time before we gradually sift downward and establish a new range in the 1200's instead of 1300's.

My guess for Tuesday is that we have a small bounce. There is no economic data to "move" the market, and it may be viewed as a positive sign that we bounce back today. Thus, I think there is a decent shot of a bounce Tue and I will resell my C fund holdings (at least half) at that time if it's at least a 1% move.

 

[robo]

Growl!

 

[Birchtree]

In my younger days I would call that "groovy".

 

[robo]

In my younger days I would call that "groovy".

I think that's Bullish, but it's tough to be Bullish these days. I thought today for sure we could test the lows! Darn Bulls....

 

[robo]

Bullitt,

What say you friend? Another rumor that ticked the Bears off today.


From MarketWatch:

"U.S. stocks come off lows on Ambac bail-out report

3:18 PM ET, Mar 04, 2008 - By Nick Godt - 12 minutes ago

NEW YORK (MarketWatch) -- U.S. stocks were off earlier lows in afternoon trade Tuesday, as a report of a deal to bail-out ailing bond insurer Ambac Inc. helped ease the market's worries about the credit crisis. The Dow Jones Industrial Average was down 77 points at 12,181, after earlier falling well over 200 points to a low of 12,032. The S&P 500 index was down 6 points at 1,324, well of its earlier low of 1,307, while the Nasdaq Composite was up 3 points at 2,261, after earlier falling to a low fof 2,221. News channel CNBC reported progress on the deal to bail-out Ambac ."


Henry's thoughts about the above article:

I am inclined to believe that this will happen soon - followed by a reiteration of the triple AAA ratings of both Ambac and MBIA. Once the Fed and regulators give their stamp of approval, then there will be no more questions asked. Rules are meant to be broken. The entire U.S. financial sector was technically insolvent during a significant chunk of the 1980s and yet the stock market rallied anyway.

This is the most efficient way to "plug the hole in the dam" and that is why the Fed and the regulators are paying the most attention to this and its potential resolution right now.

 

[Bullitt]

Robo, I'm glad to see that more have left the Neutral camp and joined the Bearish ranks in the Birinyi Poll. Neutral.... I'm still trying to figure out what that means. I guess it's like that disclaimer that you should, 'do your homework before buying any stock recommendations.' I'm also bullish on the fact that so much press has been given to the TA trading methodology lately.
Additional buy signals continue to flash go, go, go.
---------------------
From Hulbert's Digest

Consider what happened to the Hulbert Stock Newsletter Sentiment Index (HSNSI) over just the first two trading sessions of this week. The HSNSI reflects the average recommended stock market exposure among a subset of short-term market timing newsletters tracked by the Hulbert Financial Digest.

As recently as Friday, the HSNSI stood at 7.7%. As of the close of trading on Tuesday of this week, in contrast, this sentiment benchmark stood at minus 16.4%. This negative reading means that the editor of the average short-term market timing newsletter is now recommending that his clients allocate 16.4% of their equity portfolios to going short the market.
So in just two trading days' time, the average recommended exposure level dropped by more than 24 percentage points. The magnitude of such a drop, in such a short period of time, is in and of itself an encouraging sign, from a contrarian point of view.

But that's not all the good news. At its current level, the HSNSI is now lower than where it stood at the Jan. 22 lows. In fact, it is now the lowest it has been in two and one-half years; October 2005 is the last time it was any lower.

The bottom line? We now have met the contrarian preconditions for a successful retest of those lows from six weeks ago.

http://www.marketwatch.com/News/Sto...4D73-8B13-EE5F7AF64A12}&siteid=nwhnwhnr&lsn=3

 

[robo]

The bottom line? We now have met the contrarian preconditions for a successful retest of those lows from six weeks ago.

http://www.marketwatch.com/News/Sto...4D73-8B13-EE5F7AF64A12}&siteid=nwhnwhnr&lsn=3

Bullitt,

It really looked ugly the last few days.... This selling could be margin calls and forced liquidation. Any thoughts on this?

The Boyz couldn't hold 1310, but Fib level 1296 held. I'm going to hedge my accounts if they take out 1296..... Checking with Jason on some Historical data going into tomorrows job report numbers with the market down this many days in the last few weeks.

Another wild day!!!