Bullitt's Account Talk

[Wolverine]

I think this "bull melt-up" will hit a hard wall at the S&P 1490-1500 area. Until we can break 1500 and hold it, I am calling this a neutral market.

Yes, this area would be a good area to keep an eye on I would think.

Neutral market sounds about right for me also. Just not convinced as of yet we are through all this.

Yes, today was good, but, for me it seemed a bit much. A short term show of force maybe? Just a thought.

Ameteur brain cells at work here with me though.........

 

[Bullitt]

I read an article about a Fund Manager who sold out before the crash of 1987. He was looked at as a market genius. The only problem is that he didn't buy until the market took out the old highs some time later and missed out on some major moves. Sometimes you've just gotta go for it.

Birchtree, I like where your head's at. Unfortunately for me, I get to witness the invastion of Canada on a daily basis from my neck of the woods. I've said it to my friends over the past 5 months and I'm going to say it here... "Canada is going to save Christmas". The malls can't keep the shelves full. They love to shop and it's no joke.

Covering brought about an extra 75 points after 3pm today. I'm not calling this the bottom, but I don't see how anyone can call a move like this a bad thing. Don't let the emotions get in the way of your decisions. Know your own financial plan and stick with it. Don't be like Jeff Macke who's always moping around his mug on CNBC because he missed a rally. He's so bearish on WMT that it had to have a good day sooner or later along with the entire DJIA.

 

[Bullitt]

Until we can break 1500 and hold it, I am calling this a neutral market.

Cortez this is nothing against your ideas, but if we break 1500 then the chartists will be calling for that 1550 level as major resistance. The wall of worry never goes away. It's always something. Once again, the only concern I have with this rally is that the volume was lower than the two or three days before. If the volume was higher than yesterday's, it would hold water. Short interest is still at highs so there could be a few more of these coming our way along with the seasonality. Plenty of time left until options expiration though and big money always holds on till the very end.

You either gotta be going up to bat swinging or taking. Neither one is the wrong thing, but just don't get caught looking. As the market churns, I've got my eyes on the August lows. That would confirm the bear, so until then we can only speculate.

Oh well, price is what pays us in the end. Nobody's cashing in 'volumes', 'macd's' or 'percentages' when the time comes.

 

[Bullitt]

I'm amused by the agitation being dished out by the voices of OPEC the past few days. Sorry, but it's amusing that anyone would take these guys seriously. I've read about this before but Fortune has a piece this recent issue stating that Shell believes there is more oil within the continental US than Saudi Arabia. Accessing it of course is the problem as it is almost entirely Oil Shale. Maybe some day in my life we'll be solely dependent on domestic energy.

Anyway... Plungers still at work driving the indexes down. Volume not impressive but good for a holiday week. Probably a few things going on here.
1. Holiday week, institutions unloading some holdings as we get closer to year end capital gains.
2. Wall Street doing the , and driving down the indexes because the Fed may not cut again to help out all the big money arbitragers.
3. Major uncertainty ahead with all this bearishness about retail and housing is making investors say hmmm.
4. Dollar weakness making investors feel we're heading for the Great Recession.

Big picture time. SPX is shaping up for numerous scenarios including a double bottom, H&S, double bottom failure, etc. Seems that most other fellow TSPers have covered nearly every scenario already. Personally, I'm hoping for a double bottom around 1410. That would flush out a few more weak hands and make a strong base to bounce off of and head on to higher highs while the retail panic passes. With Christmas ahead do you really think that people are going to stop buying Nintendo Wii's, XBox's, Apple Iphones and Garmin GPS systems. I don't think so. Note to analysts; keep lowering estimates. I think Paladin agrees. He seems quite bullish in the area of retail seasonality lately.

I see that some big investor in the UAE is contemplating a majority stake in a US homebuilder. Sounds reminiscent of Alaweed's purchase of C a few years back. How much more bad news can come out concerning these homebuilders? It doesn't seem to end. I'm sure that by now Joe Public is fully aware of the crash and is pressuring the homebuilders to build at even lower prices in a panic. There are plenty of localities in the US that are doing just fine and buyers can step in and buy an undervalued home today if they wanted to.

On a positive note, I'm still seeing a rash of major purchases by big name investors in sectors that seem out of favor. Down days like today make it easy for institutions to pile in because they aren't liable to move the stock price upwards and give their game away.

One last thing to think about when analyzing any technical analysis. The longer a pattern takes to develop, the more powerful and lasting it's moves will be. Our reverse head and shoulders that bottomed in Aug took 1.5 months to set up. A possible double bottom has taken at least 3 months to develop along with a possible H&S pattern of 3 months.

 

[Bullitt]

Day one of the rally.

We're getting very close to the bottom. Good volume today with a finish to the upside in SPX shows that the bears are running out of gas. Look at all the bearishness that was thrown out this morning with Freddie, only to have minimal impact on the overall big picture. Big money may get their wish of further rate cuts so it's time to start pricing that back into the market. The last hour of trading brought on a rash of buyers, but it may have been more short covering than anything.

Bullish double bottom scenario is still intact. I would have hated to be a seller today (or yesterday).

 

[phillyfed]

Day one of the rally.

We're getting very close to the bottom. Good volume today with a finish to the upside in SPX shows that the bears are running out of gas. Look at all the bearishness that was thrown out this morning with Freddie, only to have minimal impact on the overall big picture. Big money may get their wish of further rate cuts so it's time to start pricing that back into the market. The last hour of trading brought on a rash of buyers, but it may have been more short covering than anything.

Bullish double bottom scenario is still intact. I would have hated to be a seller today (or yesterday).

I endorse this post 100%. Let the Bull run. Finally, ITS TIME!!

Happy Holidays Bullitt!

 

[Show-me]

<loud clapping and whistling coming from Show-me's house>

 

[Bullitt]

Thanks for all you did for the market on Wednesday GM. It will be interesting to see if big money pushes the SPX below the 1405-1410 levels next week. Things aren't looking good. A month ago GM is hitting 52 weeks highs, while today it's at a 52 week low. The only thing that could cause that drop is GM being related to subprime lending. I remember seeing ads for that DiTech company that GM owns a few years ago and thinking to myself, "Why would anyone buy a loan thru this company?" Looks like it's going to haunt GM for a time to come.

Crushing blow dealt to anyone long on Wednesday and with that, things aren't looking too good from a technical standpoint. It's market conditions like this that show how hard it is for the retail investor to avoid the buy high sell low mentality. This is a trader's market.

The best thing to do is stick with your game plan and don't try calling audibles at the last second based on emotion. Take a look at any of your holdings outside of TSP and ask yourself why you think they have gone down in value. Is it going down in value because the entire market is dropping or are there other issues at hand causing this stock to plunge. If it's going down like the general market, forget about it. It's probably nothing. If it's going down like GM, then you know there are other circumstances at hand. If you think you should sell because you're getting an ulcer, then sell. One of the worse things an investor/trader can do is take a big loss and then suddenly declare himself a long term investor or buy and holder. If buy and hold/long term view was your intention from the beginning then this volatility shouldn't really matter.

Oh, one more thing... Beware the so called defensive stocks. They are already infested with Hedge Funds who are waiting to make their trade.

Now it's time to battle with untangling that jumble of Christmas lights in my basement. Watch out for any safari-like stampedes near shopping malls this weekend!!

 

[Steadygain]

Insightful and good advise. Thanks Bullitt

 

[Bullitt]

I saw a post regarding comments by Phil Gartman but couldn't find where it was posted. I did see that particular Fast Money episode and remember Gartman's rant. I've never taken him to be much more than another one of those commodity freaks or Gold Bugs. He was ultra bearish in that commentary he made. Nothing easier than being a bear when things are looking their worst or being a bull when we're off to new highs.

I was hoping to get some dissenting opinion from the Fast Money traders when he was done. Of course Macke agreed but I'm not so sure about Finnerman.

I'll be honest, that show is over my head as well as most of the retail crowd. Those guys are playing with major cash in options and day trades. Most of what they talk about isn't for the 'investor' and they've offered that disclaimer before on the show. I do like Finnerman though. She errs to the side of the investor more than the trader. I remember one time Macke got on a roll in bashing Walmart when some kid in college called in asking about it. Finnerman came on and said, "Hey, if you're invested in WMT as a college student, some day you're going to have a lot of money."

It's nice now because I finally bought a DVR unit so I can record any shows that I want. In the case of Fast Money, not only can I fast forward commercials, but I can also fast forward any time Macke decides to take the Microphone. I wish they'd axe Macke and bring back Strazzini. We could use a risk doctor these days.

 

[Bullitt]

Call me crazy but....

Even though the volume wasn't there, today is now day one of the rally. The past rally attempt on 11/20 was erased after GM's meltdown on 11/21, so we're starting over again. The key to a rally is the follow thru day. According to Bill O'Neill, rally's that precede the follow thru day are successful 80% of the time. We can go on and on talking about the MACD, RSI, Slow STO, etc. but in the end price is the only thing that will make you money.

I would hate to have gotten short on 11/20 when the market dropped as hard as it did. Getting short was just too obvious a thing to do when we broke down. With short interest on the rise, this really should make for some interesting scenarios next week, (provided nobody else drops a bomb on us). Today we managed to close above the 200 DMA in the Nazz and also close above 11/20's close in the SPX. Sounds confusing but a look at the charts might make it clearer.

Remember what I said in an earlier post. Find a method that works for you and stick with it. If you're getting an ulcer from this volatility, then you it's time for a check. Don't try to keep up with the Jones's in any aspect of money making or else you'll end up like CFC or FNM. And last but certainly not least... TSP talkers, have a great weekend giving thanks with your families & friends, and like Stephen Stills once said, if you can't be with the ones you love, love the one you're with.

 

[Bullitt]

Another day, another subprime problem, nother rally attempt squashed by the bears. Even though there was a bit of a squeeze to start the day off, not enough to keep everyone on board. I'm not worried though. Keep bringing out the bad news and sooner or later there will be none left. Nasdaq short interest goes on the block tomorrow and I expect it to be higher than last month. Contrarian investors understand what I mean by that.

Many of the big money managers that were holding on to certain stocks that were running wild (Tech, Shipping) commenced their selling as they may have realized that the Christmas rally may not be coming this year. As soon as the newsletters began to say tech was going to take us into the sunset, things got ugly. MSFT's gap for example will eventually get filled. Regardless of what the guy's on TV are saying, companies such as CSCO that do not issue dividends are nothing more than a trade. It's getting harder for Institions to hold on to companies that do not issue dividends when market conditions continue to shape up the way they have been. I'm thinking we are going to see rotation into dividend paying stocks pick up even more in the months ahead as Institutions continue to liquidate their momentum holdings.

Don't know where we are as far as correction percentages but we've gotta either be there or pretty close to the 10% area.

 

[Birchtree]

We are there. The current spread between the price of the DJIA and its 50-day moving average is -6.29%. This is the lowest level since March 2003, indicating a severely oversold market. While this means the index is due for a short-term bounce, it also means we are in new terrotory for the current bull market. I find that interesting - perhaps a big point banger to the upside will surface after all have left the party. Something on the order of 500 points to really spin heads - ah I'm just dreaming again.

 

[Reactive1]

The next two days are critical for the short term, it could go either way but my best guess is down in the short term with a great recoil up at some point in December. How the markets react to the current levels and retest is the great unknown and not something anyone can KNOW, but only something someone can guess at. If you are playing the long term game, it really doesn't matter, if you are trading on this, the stakes are high. Being out right now is an advantage and it could be dangerous, if we could somehow know then we would all be living on a ranch in Montana and wouldn't give a damn. I see a high risk for selloff tommorrow and that would be very telling IMO, with retail numbers off expectations and no solution to the credit perception and housing, a bounce positive seems far less likely than a move to capitulate. Critical two days ahead.

 

[FogSailing]

I agree Reactive. I'm on the sideline today and tomorrow...right now that doesn't feel like such a bad thing...Any other time I'd be in 100%..I hope tomorrow pops positive for everyone...

The real question is where is the bottom...do we go up to 1460 to 1490 tomorrow (I expect a Fed rate cut)? If we do, is it a one day dead cat, or do we begin to move positive within the 5 year channel? Or do we retest lows and actually move lower to 1375, and if we head lower, what's the surprise news ($100 oil)?

Griffin thinks we're about to move up, as do 12% and Birchtree..I hate to sound like a bear, but I'm not making a move for at least another day. We've all taken our punches this year..I'll give up the one day return if the market is still going to slide downward on Wednesday..

FS

 

[Bullitt]

Fogsailing,
The market is always right. It only likes herds at the tops or bottoms and it always seems to shake them off both times. Take a look at the August recovery we had. There were more non believers than believers in that rally which would have made 10% or more in a month and a half. The Fed has their finger on the trigger like a TSP trader. Future cuts are a strong possibility if this economy is truly slowing.

Reactive,
Every day is critical in the market, but yes. If we go below our lows, get ready for capitulation.

Birchtree,
I think you understand where my head's at. Stocks for the long run.

---------------
I remember reading an article about a fund manager who managed to be 100% cash the Thursday before the 1987 crash. He missed the major drop but here's the rub. He didn't get into the market again until it made a higher high, causing him to miss out on major gains on the way.

You're either Bullish or a Bearish. I'm willing to stomach any volatility in search of the bottom because I'm confident in my positioned investing approach. S Fund has had it's time in the sun. The days of the I Fund moving on dollar weakness may be few and far between from here on out. Now's the time for big corporations to make their move and finish the bull run that the small caps started. Everything goes in cycles.

 

[Bullitt]

Flip the switch. Back into rally mode. Good strong volume move up today powered by Citi's cash infusion. Call it what you want but bottom line is this... Big money is willing to invest in financials at these beaten down levels. Financials are going to have to lead the way if we are planning on a turnaround. I said back in August that the Financials need to show strength in order to lead the charge upwards. There have been some head fakes along the way, and I'm still patiently waiting. The bears have managed to shoot down the last two rally attempts, but this one IMO has the best chance of the three in staying power.

Can't wait for the Fed to cut rates and bring more upside. The market is pricing in a default of every subprime loan which is very much overdone. Big money decided that it was time for a correction, and that meant it was time for a correction with subprime as it's trigger. We did hit the 10% magical number yesterday which I was not aware of until today. Buy signals and short covering were triggered all across the board as a result. I'm looking forward to that 300 point day I keep hearing about but the beauty of it is that it's only going to come when we're least expecting it.

Also good to see Oil tanking today. I've been waiting a long time for that bubble to show signs of deflating.

 

[merlin]

Bullitt,

Bullitt the movie is on AMC tonight. Definitely one of his best.

 

[Tempest]

If Abu Dhabi Investment Authority is Bullish? Well.....

 

[RPM]

We did hit the 10% magical number yesterday which I was not aware of until today.

Where did you get this info? At what level did we hit the 10% (from what level?) Thanks.