Bullitt's Account Talk

[Birchtree]

We may already be plugged into a U bottom - no waiting around for the retest - every technician on the street will be on the lookout for the W retest that may not arrive. I'm about out of spill so I'm prepared to ride the train for awhile - I need the relaxation.

 

[Bullitt]

Summertime and I really haven't got time for the pain. I'm happy with my decision to go against the herd by implementing a "Buying in May and Going Away" approach for summertime. Made a personal record in my TSP today as I increased the contri allocation amount for this pay period to the highest yet. Haven't seen the daily prices yet, but so far it looks like it's going according to plan as I made the contribution today.

They keep trying to get me to let go and give in by using words like recession and crash but I plan on holding these shares for a while. We're past the point of no return if you're still invested in equities and I know how much it hurts to see people like Cramer saying it's time to sell financials but... how about GS with $38.45 Million in block uptick trades today? Somebody big is buying financials.

I have to cut it short, but I just haven't got the time to be worrying about the market with this beautiful weather as of late. Time to hit the streets with my Madone. Keep hanging on Longs.

 

[weatherweenie]

Time to hit the streets with my Madone.

You had me at Madone :nuts:

 

[Bullitt]

Today I noticed that some company named 'Berkshire' disclosed a 8.7M share stake in BAC and some Hedge Fund named 'ESL Investments' disclosed a 60% increase in their C holdings. Even though they've been buying up major shares since before this correction, they paid a higher price last month for both than they would today. I've been saying for a while that Smart Money is buying financials and that it's going to increase, BWDIK, I'm the Dumb Money.

I'm gonna blame all you guys that jumped to the F fund today for the dropoff after noon. Just kidding! (But just for thought..... Tom, your IFT's just might wield more power than some hedge funds.)

 

[Birchtree]

Some hedge funds were probably pre-empting the possibility of margin calls today. I think most of the panic selling has been completed. I'll sit tight for the next couple hundred points to the downside and will then be forced to step up and hold my nose and BUY. All it takes is superlative manure.

 

[ATCJeff]

Some hedge funds were probably pre-empting the possibility of margin calls today. I think most of the panic selling has been completed. I'll sit tight for the next couple hundred points to the downside and will then be forced to step up and hold my nose and BUY. All it takes is superlative manure.

Birch,

We need more cheerleaders. Or just shout louder please. I'll see if I can get you some airtime on CNBC. You want Erin, Maria, or Liz?

 

[Bullitt]

LOL!! (First thing I did when I saw the official close)

This day can be construed in one of two ways.

1. Reversal
2. Day one of the rally

Huge volume shakeout below the 200 DMA which is very significant and a hammer candle which represents a reversal pattern. Today was officially a Panic Selloff. No two ways about it. We'll see what tomorrow brings, but more importantly, next week is the key.

Luck to Longs and those riding it out.

 

[Bullitt]

I think something like this has been posted before, but I found it interesting enough to reiterate. Courtesy of Money.

::If you would have invested $10K in the S&P 500 in 1982 and let it ride you would have had $93K by the end of 2001. If you would have tried to maximize gains and missed
The best 10 days you'd have only $56K
The best 30 days you'd have only $28.1K
The best 50 days you'd have only $15.78K

------------------------------------------------

I know the arguement can be made that you could have maximized gains by being out of the market the worst 10, 30, 50 days, etc. but the point is the difference over the long run that missing only a few great days makes. So the question I've been asking myself is, "Is it really worth it in the long run to be out of the market for a .25% drop only to miss a 2% follow thru day the next day?"

I made more interfund transfers in the past than as of late for two reasons. First, I was hitting more of the .15% gain days than 1% gain days in TSP. Of course we can all blame some but not all of the misses on the fact that it's not always practical to run to a CPU and make an educated IFT before the deadline. (Especially at work.) Second, as the summer months come along, work gets too busy and every bit of time off that isn't already booked is spent doing things other than 'staring at the ticker'.

I'm looking at this correction as a great buying opp for my long years ahead and have been going with a steady DCA approach recently. My pay period contribution amount has even been increased for this specific event. In the end, everybody should understand their own personal appetite for risk.

As for the short sell on a downtick rule change... I think it's going to work to the Bull's advantage in the time ahead. I hate to try to predict short term, but if/when we get a retest of the 200 DMA, imagine how many more short sellers will be trapped on the bounce. There was a huge short squeeze friday after the fed announcement, but short sellers alone didn't cause 5 Billion plus volume on the S&P. Panic buying contributed as well. Couple the two together and we've got the fuel to easily drive the Dow 300+ in one day.

 

[tsptalk]

I think something like this has been posted before, but I found it interesting enough to reiterate. Courtesy of Money.

::If you would have invested $10K in the S&P 500 in 1982 and let it ride you would have had $93K by the end of 2001. If you would have tried to maximize gains and missed
The best 10 days you'd have only $56K
The best 30 days you'd have only $28.1K
The best 50 days you'd have only $15.78K

------------------------------------------------

I know the arguement can be made that you could have maximized gains by being out of the market the worst 10, 30, 50 days, etc. but the point is the difference over the long run that missing only a few great days makes. So the question I've been asking myself is, "Is it really worth it in the long run to be out of the market for a .25% drop only to miss a 2% follow thru day the next day?"

I would use the following as a counterpoint - The Sentiment Survey System, Trader Fred's system and the Ebbchart - all of which are beating the averages handily - do the timing thing. Both the SSS and Fred's systems have been out of the market more than in this year. The ebbchart is in a little more, but the Sentiment Survey (+28% in '06, and +12.4% so far this year) did it two years in a row now - big returns and out more than in.

 

[Bullitt]

I'm amazed by the accuracy and consistency of the systems on this board. Hopefully some day we'll have a real life example to send to Money from tsptalk.com showing that it's possible to beat the averages with a conservative exposure to the market in the long term.

As for today's action:
Volume has been fizzling out the past 3 trading days which can be interpreted as lack of conviction on buyers or lack of sellers. Either way, the fuel isn't there yet to blast us past the 200DMA and I still think we've got a few more trading days until we get our follow thru day. I've seen some blogs calling 8/7 the follow thru day, but I'm not convinced. This is day 3 of the rally IMO. 2 or 3 more days like this could bring on heavy buyers/squeezes/panic buyers. There's lots of cash floating around out there as TrimTabs posted and outflow of $19.8 million last week compared to an inflow of $6.2 million the week prior in mutual funds.

People want back in and when they see that Buffet may be buying a stake in CFC and that LOW might be bottoming, they make emotional decisions. How much worse can the news be coming out tomorrow on TOL? But don't let Buffet fool you, he's fast money just the same. In 2002 he backed up the truck on junk bonds after the Enron thing and flipped them for a $1.1 billion gain a year later.

How about that positive divergence in the NYAD?

Like George Bush said time and time again in that famous speech, "It's hard work", and, "It's gonna continue to take alot of hard work."

 

[Bullitt]

The bottom is imminent. Or we've already seen the bottom. Volume divergence says we might get a retest but everyone is expecting a retest to occur so it probably won't happen. I'm expecting more of a slight consolidation in the days ahead, not a retest. The bad news is already priced in. Look at LOW giving sub par forward earnings and the stock moves higher. I just hope that the volume takes off when we break the 50DMA. Right now the Institutional buyers aren't participating as much as a bull would like for this rally. Some of the lack of conviction by institutions can be blamed on Summer trading but they really aren't engaged in the rally quite yet. Once again, Bulls find themselves climbing a wall of worry.

Like I said in a seperate post, the fact that TSP has made a note of the amount of money outflows from C,S,I the past two weeks should be taken as a positive sign. We've either passed the bottom or will be hitting it very soon. Dumb money is a great contrarian indicator.

Long term buyers, you can still buy back in but you're running out of time.

 

[Bullitt]

Bears are running out of ammunition.

Pretty wimpy showing by the bears today given such bad news on housing. Actually have to go back to 7/4 to see volume this weak, and 7/4 was a shortened trading day. Just goes to show that all of the bad news is already priced in. Any good news could be a spark.

Since Big Money has already done their bottom picking, all they need now is a catalyst for them to add more fuel to the fire. I just hope that the catalyst everyone is waiting for isn't a fed rate cut, for I have a feeling we've already seen the extent of Fed action.

Anyway, looks like a lull in the action for now, but some M&A activity with X in after hours may be a spark tomorrow. Above the 200 DMA, a few positive technical indicators, and no need to worry. Still 'All In' while weathering the storm yet still feeling that everything is going to be alright.

 

[Bullitt]

The selloff after the FOMC minutes release was a planned selloff. The markets are moved by program trading these days. Big Money made a quick 40-100 points on the S&P and knew that any uptick in the release would be a great time to sell. Probably a few hedge funds running to the exits after realizing that China, who is a major buyer of US debt, is requesting deeper disclosure as to exactly what kind of debt they are buying from big US businesses. Good for China. Hedge funds have been sidestepping reality for too long. Maybe this will bring down another one.

 

[Bullitt]

I'm getting closer to recouping my 'losses' from the past month. Like I've said before, time spent with online investing has been quite sporadic this summer so I just decided to hold on tight and let things go for a while. I'm glad I'm playing it this way because it's been some crazy trading recently and honestly, I probably would have maximized my losses.

I know the DJIA is not a realistic gauge of the market but it did break it's downtrend with Friday's action. Not that it means the bad time are guaranteed to be over, but the important thing is that a good bit of computer based trading is based on the Dow Index. With that, we could be seeing a progressive participation in the rally which is in it's early stages. COMPQ is proof positive that the market is in rally mode after giving a confirmation day last week. Smart money has been driving up tech the past 2 months on seasonality but retail investors have just caught on. If only the XLF could gain some upside momentum.

 

[Bullitt]

Look at how XLF held up today. The smart money was buying financials. I'm not sure if it's in hope of a rate cut or an overdone subprime thing. Either way, it weathered the storm. Financials were first to take the plunge, and will be first to rise again. Entire market was a little overbought short term and was due for at least some consolidation.

Off topic but hey, anyone looking for a rebound in housing need look no further than the homebuilders. They led the housing boom up and then collapsed well before Joe Sixpack noticed the downfall. It may be years but it's something to keep an eye on.

 

[Birchtree]

The cooler has been summoned.

 

[Bullitt]

A reversal won't be announced suddenly by Maria on CNBC. By time she reports 'news' of the resurgence of the uptrend, it will only be a case of Johnny Come Lately, which is slang for late to the party, which is slang for Panic Buying.

For anyone else who noticed, the confirmed rally as of 8/29 in COMPQ is holding up quite well. We only needed one major index to give the signal and I'd rather it be the Nazz than the Dow. The flight from bonds to stocks has begun. I wonder if I'll be able to see the fireworks from the far away tropical island I'll be on next week when we really run.

However, the market may react 'negatively' to the rate cuts Bernanke will provide next FOMC. The ones we call big money have been gearing up for this big event for some time now and since hedge funds account for roughly 40% of the daily summer trading volume I think you know who I'm talking about. Those players are salivating to sell the news to the retail investors in order to swing a quick buck. They may provide for some turbulence in the short term but they won't even be a blip on the uptrend's radar.

Weak dollar does have some positives. It only makes US assets cheaper for the world. That could mean anything from tourists staying in more expensive hotels to leveraged buyouts. I wonder what this billionaire has in store for BSC.

 

[Bullitt]

The only thing that concerns me about today is the continued advance on lighter volume. Oh well, price is the only thing that pays anyway.

I count at least 9 days down the past month and a half in the 'Agg Index' which closely correlates to the F fund. It only took 5 or 6 days like this to bring about the SPX correction. QID and DOG continue to trend lower with negative divergences everywhere while the Spiders, Cubes and Diamonds are about to cross the zero sum line.

I'm still confident the bottom is behind us and that all we need is a catalyst at this point to advance further. I don't think the catalyst will be the rate cut. See my post from 9/11 on why I don't think a rate cut alone will do it. However, a rate cut along with another cut of the discount rate may light the fuse. I'm not happy about a weaker dollar, but there are positives to it. US big business has exposure to the world. Any profits translated to dollars will seem even more profitable. Of course... that's an oversimplification though.

I'll be away for a short bit, but I'm staying long. This rally has legs.

 

[Bullitt]

Safe to say we're not going to see that retest. Not after a breakout above the 50 DMA of the magnitude we witnessed last week. Tremendous strength waiting to fully unwind. Giving it some time, but all the folks who put record amounts of money into their money market accounts will be looking to get back into this. My guess is it won't be until we break 14K again. This time the breakout will be for real as investors will flood into it after realizing they missed a month and half buying opportunity.

I wouldn't expect the SP500 to stay in the 1500-1520 region too long from a technical standpoint as the trendline from the bottom is pointing towards the moon. Anything pullback into that region is going to be what's called a dip, or a buying opportunity. This is the way the quants and technical hedge funds play the game. 50 DMA's and trend lines may seem like small cues to us but huge money quants live and die by them.

I may be looking to add more to my I fund this week on any pullback/weakness. We'll see how things go.

Luck to longs.

 

[FUTURESTRADER]

Safe to say we're not going to see that retest. Not after a breakout above the 50 DMA of the magnitude we witnessed last week.

Bullit,

If you don't think we'll see 1400 by october expiration, oct 19th, you could sell 1 october 1400 put option and make $1250. Or sell 2 or 3 and make $1250 each.