FireWeatherMet Account Talk

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Was very busy this morning but wanted to wait for a dip before getting in...and the mid morning drop on our indices pushed me to it, but I didn't make a full decision until 3 minutes before the IFT deadline.

So basically, after all my bashing of the I fund...I am a glutton for more punishment because I went 50% S and 50% I.

Some of the reasons:

- False crown top last week on US markets as C/S funds pushed up above that topping pattern.

- Draghi's positive comments played a small role.

- The Euro FUnds, like the German DAX, the French CAC and our -I- Fund have had a minor pullback to between the 20day to 50 day EMA's on their respective indices, and they started coming back up from it yesterday.

- I fund outperformed US markets yesterday bigtime, which reminds me of how it behaves sometimes...after a period of under-performing US stocks it can quickly outshine them again, as the value of the Euro to US Dollar shifts...and we might be in one of those shifts.

So (maybe after rereading BirchTrees I Fund Manifesto) I decided to keep a foot on each rock...going 50% S and 50% I.

Plan is to stay in until another spiking crown pattern and higher VIX shows up....will use the S&P as the main barometer for that. We've been up so much in the past 2 months that any significant correction should show itself with some discernible topping pattern before a big drop. Otherwise 1-3 day dips are OK.Don't want to miss a "bleed-up" higher.

My apologies for not posting earlier...guess I should realize that maintaining an account like this means I should give a bit of lead time before the IFT deadline before making a move.
 
Some of the news that helped solidify my decision to jump back in (and partly into the dreaded I Fund again).

Stocks make a U-turn and rise on housing, Europe
Stocks rise on Wall Street a day after sell-off, driven by home prices, European manufacturing
By Christina Rexrode, AP Business Writer | Associated Press – Tue, Feb 5, 2013

NEW YORK (AP) -- The stock market jumped Tuesday following a surge in U.S. home prices and new signs of strength in Europe's economy..........see rest below

Stocks make a U-turn and rise on housing, Europe - Yahoo! News
 
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This might help you a bit.:D
13 February 2013 Last updated at 12:09 ET
EU and US free-trade talks launched

The European Union and the US will begin formal talks on a free-trade agreement, paving the way for the biggest trade deal in history.
European Commission President Jose Manuel Barroso made the announcement following President Barack Obama's State of the Union address.
A deal would bring down trading barriers between the two biggest economies in the world.
EU-US trade is worth around 455bn euros (£393bn; $613bn) a year.
"A future deal between the world's two most important economic powers will be a game-changer, giving a strong boost to our economies on both sides of the Atlantic," said Mr Barroso, speaking in Brussels.
The EU estimates that a "comprehensive and ambitious agreement" will boost annual GDP growth by 0.5%.
BBC News - EU and US free-trade talks launched
 
On the other hand I thought about what our "smart money" might be doing, but hard to figure out our "smart money" this early in 2013, so I went to our top 5 in 2012 and 2011.
Wanted to get a bit of sampling from 2 different stock years.

What I found from this 10 member "Smartest Money" TSPTalk sample...is that 4 out of 10 (40%) were currently in stocks (mostly S Fund) while 6 out of 10 (60%) were in G or F.

Out of those 6 in G/F...4 of those 6 went from stocks to safety between Jan 30 and Feb 6...during the formation of the recent "false top".
Some of them even mentioned on their Recent IFT's posts that it looks like a top. Now we know it was probably a false top...but Smart Money usually doesn't chase the market.
Reason I am "chasing" is because I think there is a good likelihood to go up to the next Fibonacci level of resistance at 1550, so sidestepping a potential topping pattern threat near 1510 but getting back in now near 1520 (after confirmation of a false top) makes sense to me.
 
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FireWeatherMet said:
On the other hand I thought about what our "smart money" might be doing, but hard to figure out our "smart money" this early in 2013, so I went to our top 5 in 2012 and 2011. Wanted to get a bit of sampling from 2 different stock years.

What I found from this 10 member "Smartest Money" TSPTalk sample...is that 4 out of 10 (40%) were currently in stocks (mostly S Fund)....while 6 out of 10 (60%) were in F and/or G.

Out of those 6 in G/F...4 of those 6 went from stocks to safety between Jan 30 and Feb 6...during the formation of the recent "false top". Some of them even mentioned on their Recent IFT's posts that it looks like a top. Now we know it was probably a false top...but Smart Money usually doesn't chase the market. Reason I am "chasing" is because I think there is a good likelihood to go up to the next Fibonacci level of resistance at 1550, so getting in around 1520 makes sense to me.
Click to expand...
I'm looking past 1550 to 1600, by April. And when it hits that number, at that time, there will be no such thing as "Sell in May.....". The market will be in overdrive and it'll be ,"Hang on, we're going to 1700 and doing so by taking giant steps every day". I may be shorting us on that number. Could be 1750, 1800.
 
JimmyJoe said:
I'm looking past 1550 to 1600, by April. And when it hits that number, at that time, there will be no such thing as "Sell in May.....". The market will be in overdrive and it'll be ,"Hang on, we're going to 1700 and doing so by taking giant steps every day". I may be shorting us on that number. Could be 1750, 1800.
Click to expand...

why not 2000? :nuts:
 
As the most hated rally in the history of rallies continues the entirety of small investors remain entrenched in the painful memories of 2008 that take time to heal and that leave deep and abiding scars. Remember, big bull markets always find a way to keep you frightened and out. People hate to be responsible for their own pain. We need them to not return in droves but slowly over time pushing the market higher and higher. The rally will continue for several years as long as tight money conditions aren't prevalent. When the animal spirits arrive there will be no mistaken them. Don't allow yourself to be paralyzed with fear.
 
Interesting JTH, maybe you called the top after all?

If it were a true top and in its latter stages just before freefall, the VIX should be spiking more, like it was over a week ago. We'll see.
 
Going into the I Fund last week (50%) reminded me of the definition of insanity...doing the same thing & expecting a different result.

Well..well...what do we have today with the I Fund...A DIFFERENT RESULT!!!:toung:

So far this past IFT (50-50 S and I) looks good and I'll will be using the S&P as a monitor...when it approaches 1550 (another 1.5%) I plan on stepping aside...unless volatility remains very low, with small daily gains. 1550 has been a long term Fibonacci level of resistance. If VIX and indices start "chopping" I'm outta here till the fog clears.

Until then..full steam ahead (lol)
 
The 4 year rally was a stocks stealth rally that few were willing to participate in - now business is ready. Did you know that in 2008 the SPX dropped over 50 points 18 times that year - can you smell the potential as we move forward to ever higher highs. The financial markets always rally dramatically following any true bottom, so that those who panicked on the way down are punished rather than rewarded. That only seems fair in my book.
 
Not too worried at all with today's drop. :cool:

This drop was news driven, basically "speculation" on what the FED was "speculating" from last months minutes over what a "few" of them might or might not want to do many many months way down the road...maybe a year from now.

So I feel this will just be a short term thing and we snap back up quickly, within a few days.

BUT...volatility has been reintroduced...closely on the heels of the last round with the false crown of 2 weeks ago. VIX up near 19%...JTH has some nice VIX charts on his account site. Sequestration worries coming soon.

So I will stand put (50% S and 50% I), and expect to be at new highs in the next few days. , but will keep an eye on the charts for another top forming. There is a chance yesterday was the 1st point on the crown.

I would be very surprised if we continued to fall...unless Bernanke says something to the contrary.
Otherwise its possible the market goes back up, and keeps going up based on good or bad news...with bad news serving as hope that the Fed keeps on QE'ing.:o
 
FireWeatherMet said:
Not too worried at all with today's drop. :cool:

This drop was news driven, basically "speculation" on what the FED was "speculating" from last months minutes over what a "few" of them might or might not want to do many many months way down the road...maybe a year from now.

So I feel this will just be a short term thing and we snap back up quickly, within a few days.

BUT...volatility has been reintroduced...closely on the heels of the last round with the false crown of 2 weeks ago. VIX up near 19%...JTH has some nice VIX charts on his account site. Sequestration worries coming soon.

So I will stand put (50% S and 50% I), and expect to be at new highs in the next few days. , but will keep an eye on the charts for another top forming. There is a chance yesterday was the 1st point on the crown.

I would be very surprised if we continued to fall...unless Bernanke says something to the contrary.
Otherwise its possible the market goes back up, and keeps going up based on good or bad news...with bad news serving as hope that the Fed keeps on QE'ing.:o
Click to expand...

It's tough to look into the future, I'm in the same vein, 1 down day does not a pullback make.
 
As I said the other day, I am (err, mean was) not worried about the quick drop.
Long sustained rallies can have a quick 2-3% drop to the 20 day EMA...which only serves as a quick steam release on the pressure cooker before a quick rise to higher heights.

As far as we've risen, a much more well defined top will likely form when we do get that more significant pullback. In my opinion, the action in the past 2-3 days mirrors what happened back in the spring of 2012 (below, left side) where the S&P had a sustained 2 1/2 month rise before a quick 2-3% drop to just below the 20 day EMA (highlighted in purple box). Then just as quickly the market reversed that dip and soared back to higher highs, before a more classic, crowing top began to form which would have been your exit signal (uhm, Birch) before a 2-3 month, 10% correction.

Looking at the charts (and today's action) either we're already in a correction with today being the "dead-cat bounce", or (IMHO more likely) we're in that same phase as early March 2012, (purple box on right) with a quick return to higher highs. This would correspond better to the next Fibonacci level of resistance near 1550. If we break out in the next few days, that level would be one to watch out for spiking tops and rising VIX.

So I continue to stand pat, and hope that this isn't the dead cat bouncing, with the March 1st sequester kicking in another sharp move downward. That is a possibility, but I'm betting against that attm.:cool:

SP 2.jpg
​
 
That May correction ended up taking -$445K out of my oceanic account - but I did manage to get it all back. I'm not looking for any type of repeat this year. Sure glad you are showing some good sense investment ideas - I knew all along you were capable.
 
I made this chart for you, keeping in mind your observations of the crowned top. This chart is only theoretical, it's a little too experimental for my preference, but the math does seem to add up. This scenario calls for a 1500 bottom on 6 March.

View attachment 22669
 
JTH said:
I made this chart for you, keeping in mind your observations of the crowned top. This chart is only theoretical, it's a little too experimental for my preference, but the math does seem to add up. This scenario calls for a 1500 bottom on 6 March.

View attachment 22669
Click to expand...

Thanks for the chart JT.
Sorry, been "unplugged" the past few days.

So were' gonna see a pretty hard tumble (-3%) tomorrow??
 
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