Ed the Fed's Account Talk

[Ed_the_Fed]

I have decided to hide in the safety of G for a few more days. I don't like the looks of todays charts. We will see how the market reacts tomorrow. RSI's are still in the 40's for all three funds. For a true shakeout, I would like to see them hit 30 and then bounce back up.

 

[Ed_the_Fed]

I was out of town last week on business travel. Looks like I picked a good time to be away as I am hiding in the G. This week still bothers me. Could this be the beginning of a major correction? I will stay safe in the G until I feel comfortable engaging again.

 

[Show-me]

We are wondering the same thing, only some of us are in. Luck you and glad your back.

 

[Ed_the_Fed]

Finally, we saw a breakout above 1540 on the S&P500 that held. This is a bullish signal so I am moving back into the market 40C 30S and 30I. I am looking for at least 2% gain on the C. Hopefully even more in the other funds.

 

[Ed_the_Fed]

The S&P500 has held well above the 1540 level which it finally broke through. Today was a great day with a lot of positive earnings reports. I think the market should continue to be up for the next few days. I still think this never ending upward march has to end soon. Watch for a blowoff top with several big up days in a row. That would be a sign that the big selloff might be coming. Unfortunately, we don't always see the blowoff top. I have made a IFT to the I fund for Friday. Hoping the I fund will have a few big up days for me.

 

[2moryrs]

Thank you for your reply. I still don't understand alot of the financial talk but I keep studying and it slowly comes to me.

 

[Ed_the_Fed]

I have decided to move to the G fund for tomorrow. I see three tall white candles on the DW4500 chart totalling over 30 points. If you look at the charts, this typically is the maximum amount the fund will go up before pulling back. A retest of the low at 626.97 is also possible. However, the strength of the recent upsurge leads me to believe we won't retest. A 10-15 point pullback will be a good re-entry point IMHO to the S fund to be hopefully followed by another 30 point surge up. July hurt me as it did many others and now I am trying to regroup.

 

[Ed_the_Fed]

Boy am I a happy camper that I jumped out of the market at Wednesday COB. My charts are telling me to jump back into the I fund for Monday but my gut feeling is to wait at least one more day. I need to see a definite bottom established in one of the funds before I re-enter. I think we may still see a retest of the 1432-33 level on the SP500 (August 6 low), EFA level of 77.53 (August 3 low), and/or DWCP level of 626.97 (August 6 low). EFA is probably close enough to its low now. If that level holds, we should see a nice rebound up. I see the market has now gone green in both the DWCP and the SP500. Perhaps this will serve as the bottom. I will want to see follow through on Monday before I re-enter.

 

[Ed_the_Fed]

Looking at charts this afternoon, I think the DW4500 is looking pretty good. If the Friday low can hold and we see positive upward movement above Wednesday's 665.91 high, then the S fund could have a nice ride back up to the mid July high of 703.93. That is over 8.5% above the current price! I would take that for sure!

The EFA chart looks pretty ugly at first glance. It gapped down on Friday so it may refill that gap in the short term. It is sitting on the 200 day MA so that may hold. Since it has dropped through many support levels, the next one I see is around 75.25. If that doesn't hold, the next one is all the way down at 71-71.5 range. Hopefully, the 200 Day MA can hold and the EFA starts it way back up. I do see a five wave up, three wave down pattern in place if the current low holds. That could mean the start of a new five wave pattern up for anybody who follows Elliott Wave Theory. If we can get back to the mid July high of 83.8, that would represent over a 9% gain from current level.

The SP500 chart looks a lot like the DW4500. It came very close to retesting its August 6 low on Friday. I would expect a bounce up from here. A positive sign would be if it trades above the August 8 high of 1503.89. It could then run back up to its mid July high of 1555.90. That would represent a 7% gain over current price level.

I am leaning toward a 50/50 split in the I and S COB Monday. I will have to see what the market does on Monday morning and make my decision then.

 

[airlift]

Thanks for your input Ed!

 

[fabijo]

Ed, great thoughts. I also have noticed that in the recent drops, the C Fund returned and surpassed to its previous highs faster than the S Fund.

 

[Ed_the_Fed]

Fabijo,

Thanks for that observation on the C fund. I may have to consider a three way equal split between C, S and I.

 

[Ed_the_Fed]

Keep an eye on the August 3 lows in the DW4500 and the SP500. We may very well test them today. DW4500 level of around 632 and SP500 level of around 1433 look to be support. If the market breaks below these levels and doesn't bounce back before market close above these figures, we may see some more downside movement this week. 1417 and 1375 (March) look to be the next support levels on the SP500. That represents another 4% drop down to the 1375 level. On the DW4500, the next support level is around 622 (January and March). The March support level low on the EFA is all the way down at 70.90. That is almost 7.5% below current EFA price. Tread with extreme caution. This is scary. I will probably stay in the I one more day and look for some sort of bounce tomorrow.

 

[Ed_the_Fed]

I will stay in the I over the weekend in the hopes of catching a bounce from Europe and overseas on Sunday night. Will probably move to 100S COB Monday.

 

[Ed_the_Fed]

I think we may be in an upward swing in the markets going forward. It is possible that we could retest the recent lows before we head back up but I think that is not real likely. I can't decide if I like the I better or the S so am split 50-50 and will remain that way for now. Both took pretty decent poundings of late so I expect both will be good investments in the short term. I think they will move in tandem but if one lags the other, I may jump into the laggard looking to get the extra few pennies when it catches up!

 

[Ed_the_Fed]

I decided to try and catch the +FV in the I tomorrow. I am not sure if this is a good move or a bad move but will try it nonetheless. Now that USM's have gone green, I am hoping for a follow through on the overseas markets tonight. COB 8/30 I am 100I.

 

[Ed_the_Fed]

The DJW4500 chart is looking pretty good for next week. We are currently setting higher highs followed by higher lows so I would like to see the August 28/29 low of around 638 hold. If today's low holds on Monday at or above 638, I think we could see a run up to 680 or higher during the week. That is about 4.5% above the current low. 685 or 690 would not be out of the question at this point.

I have made an IFT for COB today 9/7/07 to 100% S. I am becoming frustrated with the +FV and -FV's going on in the I fund.

 

[Birchtree]

I'll be glad to see you move up past those cooters that are blocking your lane.