Bullitt's Account Talk

[Bullitt]

Birch, 6 for 6, but we've got a few infield singles and bloop hits in mixed in there too. The past two up days we're very powerful.

Golfer, I hear ya barking. I'm pretty much anti "the insiders" but I try not to get into politics on this MB. I did read somewhere that the investments that the fed has made into the debt world and bank stocks are currently up a pretty penny. Here's the rub... Unless they can sell without anybody knowing, they've become very long term buy and holders.

I've been reading a good deal of financial history books lately and the recent headline stories regarding crooks, insiders, stock tips, and preference from the Fed are really nothing new, regardless of how spun the headline may be.

 

[Bullitt]

I still think the rally will march higher from this correction we're currently in. Last time we corrected and moved higher there were a handful of newly minted bulls buying in. The only problem is, they proved to be weak hands as the first sign of turbulence rattled their bell. Right now I'm looking around and I see just as many top callers as there were folks tripping over their own feet to get in on the dip.

Since the market is quite extended from the 50 DMA a retracement to the MA would be nothing but business as usual for a rally of this magnitude. Too many folks are getting caught up in whether or not this is a bear rally, cyclical bull or new baby bull market. Doesn't matter. You're either making money or getting whipsawed. I see a lot of chatter saying to the effect, 'if we break 1040 I'll buy back in.' No you won't, because when 1040 hits, you'll be looking for a pullback. I don't believe we've even hit the point of panic buying which will eventually come about.

Do I believe the market is going up tomorrow? No, but I do believe we're going to catch a headfake in the US Dollar index breaking above it's downtrend line here sometime soon. That should get more folks selling. The VIX.... about as played out as the term, 'the new normal'. I think it's useless. If people run to safety, they go to cash, not options. Anyone see the bullish move above 970 in gold today? I think the dollar is toast from here, but bear rallies along the way are the object of the game.

Case in point. It's pretty hard to find anyone who believes US Treasuries are in a bull market or will be starting one any time soon, but those who are betting against treasuries with TBT are having a tough time holding onto their position.

I think too many folks are worried about the IFT limitations and are letting them influence their investing decisions. How much longer are we going to kick a dead horse here? Going 100% in today and 100% out tomorrow is gambling and a quick way to burnout in the stock market. Don't forget, the advice to 'Use stops' and 'Dollar cost average for the long term' were both written by brokers.

So, I'm thinking we get a slow downturn to 965-970 to shake the tree a bit more, and then resumption of the rally towards 1100-1150 or even higher, but I'll be looking to be pretty much out by that point.

 

[coolhand]

I still think the rally will march higher from this correction we're currently in. Last time we corrected and moved higher there were a handful of newly minted bulls buying in. The only problem is, they proved to be weak hands as the first sign of turbulence rattled their bell. Right now I'm looking around and I see just as many top callers as there were folks tripping over their own feet to get in on the dip.

Since the market is quite extended from the 50 DMA a retracement to the MA would be nothing but business as usual for a rally of this magnitude. Too many folks are getting caught up in whether or not this is a bear rally, cyclical bull or new baby bull market. Doesn't matter. You're either making money or getting whipsawed. I see a lot of chatter saying to the effect, 'if we break 1040 I'll buy back in.' No you won't, because when 1040 hits, you'll be looking for a pullback. I don't believe we've even hit the point of panic buying which will eventually come about.

Do I believe the market is going up tomorrow? No, but I do believe we're going to catch a headfake in the US Dollar index breaking above it's downtrend line here sometime soon. That should get more folks selling. The VIX.... about as played out as the term, 'the new normal'. I think it's useless. If people run to safety, they go to cash, not options. Anyone see the bullish move above 970 in gold today? I think the dollar is toast from here, but bear rallies along the way are the object of the game.

Case in point. It's pretty hard to find anyone who believes US Treasuries are in a bull market or will be starting one any time soon, but those who are betting against treasuries with TBT are having a tough time holding onto their position.

I think too many folks are worried about the IFT limitations and are letting them influence their investing decisions. How much longer are we going to kick a dead horse here? Going 100% in today and 100% out tomorrow is gambling and a quick way to burnout in the stock market. Don't forget, the advice to 'Use stops' and 'Dollar cost average for the long term' were both written by brokers.

So, I'm thinking we get a slow downturn to 965-970 to shake the tree a bit more, and then resumption of the rally towards 1100-1150 or even higher, but I'll be looking to be pretty much out by that point.

Your reasoning fits in well with the SPX/Nikkei chart similarities posted in my thread today. As well as the link BT provided during that discussion.

 

[Birchtree]

Will it be 5 for 5 today and 6 for 6 tomorrow. This sure is fun. I'm going to buy this bull until I run out of money. The hard drop on the VIX today has my attention and my strategy to move my tugboat to dry dock at a level of 20 is set. Well I guess I could always hedge that bet - I would prefer a time closer to the December holidays.

 

[Bullitt]

It's been easy living for the bulls, Birch, but I'm lightening up here. My plan was to lighten up some at 1050 and here we are. Putting another 12% into the G Fund tomorrow to make my new allocation:

47G, 28C, 12S, 13I

I think anybody piling into the I Fund on a play for the weak dollar is missing the big picture and getting sucked into the bullish euphoria that's in the news. In a rising market, every pick is a winner so it really doesn't matter what you're holding. I'm beginning to see a bit too much bullishness and most of the systems I follow have a full out buy signal. What's going to happen when they all start moving to a sell? Until things turn down, they'll keep going up, and top pickers will continue to get pounded.

Volume has been coming in huge and I attribute that to pension and mutual funds trying to realign their allocations. I'm always weary of high volume up days for the same reason I'm weary of high volume down days because there's always somebody on the other side of that trade. Big volume up days especially scare me because more likely than not it's momentum traders, chartists, and emotional traders piling in on the buy side after seeing the 'breakout' (today) above 1050. Who's selling them those shares?

If the uptrend continues, the next levels on my radar will be 1080, 1100, 1120'ish, and 1200.

 

[Birchtree]

I'm not taking anything off the table until my nose starts bleeding. I'm just gonna keep buying until chicken little marches past my place - singing the sky is falling. Stocks are finally starting to pop with larger price moves. I've mentioned symmetry in the past and that would take us back to 1300 and the VIX should be under 20 before the end of the year - then I'll move some off the table - until then I'll absorb any pain that comes my way.

 

[Bullitt]

I just did a re-balancing of the portfolio a few minutes ago so it's effective at tomorrow's close. Same allocation as before, but the percents were off slightly due to market gyrations. As for the IFT's, I'm going to smoke 'em if I got 'em even if it only means rebalancing.

Also, I'm playing this as another correction which should finish around 1050 or the 50 day moving average. Will the dip buyers step up and buy tommorrow? If not and we go lower, 1000-1020, I've still got close to half in cash ready for deployment.

 

[JTH]

I just did a re-balancing of the portfolio a few minutes ago so it's effective at tomorrow's close. Same allocation as before, but the percents were off slightly due to market gyrations. As for the IFT's, I'm going to smoke 'em if I got 'em even if it only means rebalancing.

Also, I'm playing this as another correction which should finish around 1050 or the 50 day moving average. Will the dip buyers step up and buy tommorrow? If not and we go lower, 1000-1020, I've still got close to half in cash ready for deployment.

I'm all in (stupid me) but that's ok because I know what my targets are for the up/down side. Those numbers you're looking at are pretty sound, but if we break below 1020 I'll be feeling some serious pain!!!

 

[Bullitt]

No action in the TSP this month because I feel 50% in 50% out is a good allocation for now. If we go down to 990 or so in the month ahead I will re-balance with around a 60% allocation to equities. That would be about an 11% correction from today's close which will most likely catch most investors off guard.

Taxable, Non-TSP, I unloaded a mutual fund I bought 4 years ago and a stock I've held for 3. Both will go down as LT tax loss write downs. Investors have becoming incredibly complacent the past 2 weeks, a depressed VIX that's due to bounce, and a few other indicators I follow led me to call it quits in those holdings. Otherwise, the four ETF's I piled into during the collapse are doing quite well and almost completely qualify for LT cap gains treatment. I still have orders to buy dips in those funds should the markets for those funds correct enough.

I plan on putting the cash from those sales into the Roth IRA to max out what's remaining in 2009 and then to front load 2010's contributions when eligible. My plans for the Roth IRA from here on out will most likely be an indexing strategy. I've learned my lessons from Wall Street's pitches, so I might as well aggravate them by indexing. Besides, since I can't even tap it for 29.5 years, what else would I be doing between now and then?

Nothing much else, but a good year it's been. I'm thankful for this gift of a rally which helped me manage to reap back many losses from 2008's great lessons. In the end, it's the big trends that matter, and there's no sense in getting all caught up in 5 point moves in the S&P within a 401K. Really. The big money is in the big moves. Frequent trading is bad for your financial health.

 

[WorkFE]

Frequent trading is bad for your financial health.

Got that right brother.
Thanks for all the insight this year.
Happy holidays to you and your family

 

[Birchtree]

Byron Wein thinks Japan will be the outlier surprise for 2010.

 

[Bullitt]

Thanks for the update, I stay away from full year predictions because usually by mid January most short term minds have forgotten about them already.

I'm thinking the Yen Carry Trade will resume in force. As soon as the US Dollar carry trade became the front page vogue, it has surely been destined to fail. The Japanese CB drew a line in the sand a month ago with Dollar/Yen, so I'm banking on a continued drop in the Yen by investing in Japanese funds. Currently, I have a substantial position in Japanese Small Caps that qualify for LT Cap gains which I plan on selling sometime in 2010.

 

[Bullitt]

IFT today to lighten risk. It's only a prediction but I think the top is in and I see a scenario such as the July 2007-October 2007 unfolding here in the best case. While the market did manage to work off some of it's overbought conditions, there are just too many divergences out there. With the tenacity that this drop came on, I think there will be more selling ahead as soon as the bargain hunters run out of gas. Whether this turns out to be another buying opportunity or not, I don't know, but I'm planning that we saw a bottom in the VIX and bottom in the dollar trade for weeks, and maybe months to come.

It's all risk management these days and while I'm staying somewhat invested (30%), I'm sure many fund managers would love to tell me that I'm underinvested for my age. I was going to make this move when I made my decision to unload most of my other than TSP accounts in early January, but I wasn't expecting the correction to come on with this much steam. We may tap that 1222 fib retracement or not, but I think too many are still counting on that level being hit. When everyone is planning on a certain target being reached, you'll surely have a few front runners slipping out the back door as everyone else is looking upwards. Most 2010 predictions were overly bullish, as evidenced by the market's reaction to the leaders earnings reports- AAPL and GOOG. The banks are also getting hammered, and they've been leading us for most of 2009. Not only are the big TBTF's rolling over, but it looks like the regionals are running out of gas here also.

I remember on this MB about two years ago when some of the smarter minds were saying we should watch the banks and the VIX for clues to when this market is going to turn up again. The VIX and banks, in hindsight, did give a good indication that we were ready to go higher in March 2009. Looking at the VIX and XLF today, I see just the opposite.

70 G, 15 C, 8 S, 7 I

 

[fedgolfer]

Bullitt... another thing other than XLF and the VIX, something eerily similar that may be a sign of market exhaustion, is the fate of the QQQQ's seemingly resting on the release/announcement of an Apple product. If I recall correctly, the QQQQ's just retreated from a top and the media had everyone focussed on the rollout of a revolutionary apple laptop, I think its was the MacBook Air in winter '07. To end the conference after the unveiling, investors eagerly awaited as they said, "now for the surprise everyone has waited for... Randy Newman." Are you freakin' kidding me?! He sang his song and the QQQQs sold off faster than ho's at a frat party.

Why is the media making it seem all the tech investors are watching the iTablet/iPad announcement?! seems to be putting a lot of hopes on one product that is duplicative in function.

 

[Bullitt]

Why is the media making it seem all the tech investors are watching the iTablet/iPad announcement?!

The same reason you've got 'experts' telling you to buy for the long term and that it doesn't matter when you buy as long as you hold for the long term. Look, unless this iTablet thing somehow has a cure to cancer within it's memory, it's not going to make a difference to the market.

Anybody watching that back door? This party is really thinning out here. I think the keg might be tapped, it's starting to spit out lots of air.

 

[Silverbird]

It's because the only tech words they know to make you read their article are "anything with an i-", "Apple", and "Kindle" or "e-book". :toung:

 

[Bullitt]

Just some thoughts at this juncture:

- Many folks are looking are looking to get back in after the first "correction" in 6 months.
- Still lots of overhead resistance to chew through from the traders who got caught in the sudden downdraft.
- Volume on the upside in 2010 has been horrible while downside has been quite higher than average.
- VIX still in uptrend.
- Still no IBD Follow Through Day, but we still have a few days until that could happen.
- Banks still not showing any divergence, and with the market up 1% today, KRE was down .34% and XLF only managed .22% in volatile trade. We need the banks here to rally higher. It's no different from what the smart traders on this site were saying two years ago.
- Smart Money/Dumb Money is still a push. The Smart Money bullish gauge actually dropped some today.
- US Dollar is above 80 and still above trendline channel support. The strength in the Euro is merely a short term reprieve.
- Bailing out Greece would not ensure a backstop of the rest of Europe. There's just not enough money to go round.

However, with all that I see, Monday is a holiday and next Friday is options ex, so those are two things going for the bulls in the ST. Also I suspect volume is down with this winter weather in the DC area. (Come on guys, seriously, grab a shovel, get out there and clear the streets already!) As for today's 'failed bond auction', I think that once this rally runs it's course, investors will continue their rush to the dollar and drive yields back down on US Treasuries as the two will prove to be the only safe havens in the next leg of this bear market.

 

[coolhand]

Just some thoughts at this juncture:

- Many folks are looking are looking to get back in after the first "correction" in 6 months.
- Still lots of overhead resistance to chew through from the traders who got caught in the sudden downdraft.
- Volume on the upside in 2010 has been horrible while downside has been quite higher than average.
- VIX still in uptrend.
- Still no IBD Follow Through Day, but we still have a few days until that could happen.
- Banks still not showing any divergence, and with the market up 1% today, KRE was down .34% and XLF only managed .22% in volatile trade. We need the banks here to rally higher. It's no different from what the smart traders on this site were saying two years ago.
- Smart Money/Dumb Money is still a push. The Smart Money bullish gauge actually dropped some today.
- US Dollar is above 80 and still above trendline channel support. The strength in the Euro is merely a short term reprieve.
- Bailing out Greece would not ensure a backstop of the rest of Europe. There's just not enough money to go round.

However, with all that I see, Monday is a holiday and next Friday is options ex, so those are two things going for the bulls in the ST. Also I suspect volume is down with this winter weather in the DC area. (Come on guys, seriously, grab a shovel, get out there and clear the streets already!) As for today's 'failed bond auction', I think that once this rally runs it's course, investors will continue their rush to the dollar and drive yields back down on US Treasuries as the two will prove to be the only safe havens in the next leg of this bear market.

Bought some PRULX today. Nice entry too. MACD is ripe for a fade.

 

[tsptalk]

Rick always keeps a cool head, unlike Jeff Macke. (I referred to David Faber as Brian in earlier post. I mixed em up, Brian F. is an actual friend of mine!)

Speaking of Jeff Macke (OK, it was two years ago), I was wondering what had happened to him, so I googled him and it looks / sounds like he had some kind of break down. He hasn't been on the air since.

http://www.youtube.com/watch?v=79HLnTPxMho

And this compilation: http://gawker.com/5263070/a-cnbcers-on+air-meltdown

I have seen this before, usually drug related and a switch seems to turn off. sad.

 

[fedgolfer]

I have seen this before, usually drug related and a switch seems to turn off. sad.

Wow. I was wondering what happened to him. His ability to get his point across, when he was on Fast Money, seemed to be measured by how much blow he had before they went live.