FireWeatherMet Account Talk

[FireWeatherMet]

Meant to update earlier, but struggled with decisions, and finally at 1159 ET I hit the IFT button for 50% G and 50% F.

As stated yesterday, the landscape has changed...Dow Transports breaking downward into 50 day EMA territory, and as JTH mentioned yesterday, money (likely led by fund managers) has shifted from small caps to safer large caps, and the next rotation is into cash (Jasons words, not mine). So looking to at least get out of the S.

Only missing ingredient is our Sentiment Survey...still on a buy or hold, and I suspect it will get even more "bearish" later today, indicating a strong buy (lol).

One thing that caught my interest...a look at the smartest of our smart money...compared to the lowest part of the tracker which just a week or two ago was mainly F or G, is now primarily in stocks.



Hey..who dat at #8??

 

[FireWeatherMet]

Not sure what the job report will bring...but unless its a blockbuster number (more than 250K) it seems like its a "sell the news".

- If the number is lower...then this worsens the fear of global slowdown spreading to the US. Result should be "sell".

- If it goes near expectations (near 190K) then no changes to current market, and the current market just began a downtrend. Result should be "sell".

- If its a bigger number (250K or above) well, then a short term "buy" is possible...but then fears quickly turn back to what spooked the markets in late Feb...namely the Fed trimming back QE.

We've been surprised in the past with these jobs reports...I have no idea which one will come out, but often the surprises have been higher than expected numbers. March was a good month for the markets and I don't think anyone significantly halted hiring, except for Gov't agencies and likely civilian defense contractors.

 

[FireWeatherMet]

Mr Bowl made an interesting point a few weeks ago with one of his article links.
Basically, QE has supported every major rally the past 5 years, and every time we weren't in QE (brief periods only) the market tanked.
See chart (below:




The latest round of QE in Dec, namely "infinity" was likely meant to keep markets calm while approaching QE deadlines...namely pushing that deadline a year or two into the future. This seems to have worked even beyond Ben's wildest dreams. Niether rain, sleet or snow...nor Bush tax cuts expiring, Sequester cuts, nor N Korea crazy leader dancing "Gangnam Style" on top of his missile silo's has has stood in the way of the markets biggest, boldest, bullish run, yet.

Reason I point this out, is that our dips may not be as dramatic as "the charts" would seem to indicate. I might need to keep this in mind when stepping out, to not stay out too long.

Feel we may not have a major correction (more than 5%) until most people make this QE connection and get overly bold and complacent, feeling the market will never stay down for long and as long as QE is in effect till infinity, the market will go up till infinity. When that happens, you'll see our Sentiment Survey go 60%+ bullish...and THAT's when we will likely see our good top & drop.

Until then....fight the Fed at your own peril.:notrust:

 

[MrBowl]

Here is the link to what I said March 10:

http://www.tsptalk.com/mb/politics/14940-*-obama-s-p-500-a-4.html#post398460

And if you don't want to click here's what it said:


"Here is a nice chart made last year during the Fed's Operation Twist, clearly showing the difference between market performance when QE is taking place and when it isn't...

Dr. Ed's Blog: Stocks & QE

The latest QE (QEternity) was announced in mid Sept 2012 and commenced Nov 14, 2012. I didn't make a chart, but everyone on TSPTalk should already know that the recent market low took place the next day and the S&P 500 is up 14.4% since Nov 14, with only two small very brief dips (3-4%) since.

One difference between QE2 and the current Fed operations is that the boost in 2010 came once QE2 was announced, but in the current QE the market moved sideways between the announcement date in mid Sept and the commencement day Nov 14. It makes me wonder if we are approaching diminishing returns. One day we will.

Also, if you still don't think this is the Fed's market then just look back a couple weeks at the day that the Fed notes from January became public and contained wording that at SOME POINT the POMO could be varied if the economy was looking stronger...and the market tumbled like a rock that afternoon."


At some other point I mentioned that the Federal Funds rate has been 0-0.25% since the Fall of 2008, which has caused interest-bearing investments such as savings accounts and CDs to yield next to nothing. If Ben instead had higher rates (2-3%) and didn't push yield-chasing investors into stocks, where would the stock market be today?

It's been tough staying in lately, but I remain in the S Fund thinking that any correction will be limited to 3-5% in the S&P 500.

 

[FireWeatherMet]

Putting my $$ where my mouth is...jumped in at 1158 EDT.

50% C and 50% S COB today.

Was sitting on the fence...then saw Jason jumped in also...that was the "tiebreaker" for me.
I just was a little leery of going all S given the recent market exodus out of small caps and into safer large caps...so decided to keep a toe in each pool.
One thing to keep in mind...most lengthy rallies reach their mature stage (just before topping out) when large caps start outperforming small caps. We seem to be at that stage, so I don't anticipate being in all that long...but at this point, I don't want to wait any longer, given seasonality becomes more unfavorable in a few weeks.

 

[FireWeatherMet]

Not worried...today is a "topless dip", meaning off a single high-point...so likely short term. And its still above the 20-day EMA on the S&P (1564).

Mainly panic over commodties free-falling and China's GDP growth "slowing" from an expected 8% to a paltry 7%. And commodity price falls may be a part of that China GDP drop..."producing commodities (raw materials) its a big part of China's economy.

The China thing should be forgotten very soon...if China had slowed form 8% to 4%, then that would be a different story. Otherwise it seems like a commodity fall is panicking the investor. But you may want to be soothed by what that might really mean for US stocks (read below).


Cramer: This 'Tipping Point' Great for Stocks

By Paul Toscano | CNBC – 1 hour 18 minutes ago


The commodity markets have reached a key turning point and U.S. equities will reap the benefits of lower costs as raw materials continue to slide, CNBC's Jim Cramer said Monday.

"We've reached some sort of tipping point where everyone just figures that every commodity just has to go down,... "

"Our country is a commodity taker, not a producer like China, and you're going to see a lot of our companies begin reporting really great numbers,..."

"The fall of commodities will be good for stocks, Cramer said. "When the rubble clears, the prices are coming down. We like gasoline going lower, isn't that a good thing? Gasoline is a tremendous tax on the American people..."


Cramer: This 'Tipping Point' Great for Stocks - Yahoo! Finance

So, with this commodity factoid, and Benny and the Fed keeping an 80 billion backstop every month...this fall should be shallow (again). Sound familiar?
This should shake out the weak hands, and am looking for new highs within the next 4-7 trading days.

 

[Birchtree]

I like that optimism. The China GDP was 7.7% down from 7.9%. It's just a matter of having faith for the future - things are much better.

 

[weatherweenie]

"The fall of commodities will be good for stocks, Cramer said.

That lone quote should strike fear in the heart of anyone who is long. With each call he makes, I believe more and more that Cramer is a shill for the opposite side of the trade.

 

[FireWeatherMet]

Well, so far this year being a contrarian "the opposite side of the trade" has worked well. See our TSP populations Sentiment Survey's perpetually bearish stance since Jan 1st and see where the opposite side of the trade (Sentiment Survey) puts you.

As for being a schill...All last December when the sky was falling with "job killing Bush Tax cuts expiration" and "economy killing sequester" Cramer said stay the course...its not as bad as the nervous nellies say, and actually things are much better here.

And with the market continuing upward over 10% in 3 months, he was right.

 

[weatherweenie]

Even a blind squirrel finds the occasional nut.

Well, so far this year being a contrarian "the opposite side of the trade" has worked well. See our TSP populations Sentiment Survey's perpetually bearish stance since Jan 1st and see where the opposite side of the trade (Sentiment Survey) puts you.

As for being a schill...All last December when the sky was falling with "job killing Bush Tax cuts expiration" and "economy killing sequester" Cramer said stay the course...its not as bad as the nervous nellies say, and actually things are much better here.

And with the market continuing upward over 10% in 3 months, he was right.

 

[FireWeatherMet]

C Fund +1.43% S Fund +1.69% I fund +1.40%




Aye Mon,
Days like yesterday, when da "Black Swan" briefly flap its wings,
You needs to chill, light a dutchie, and keep a cool head,
Sometimes having a smoke gives some tranquility on days like yesterday,
Leading to clarity on days like today,
Knowing things is not as bad as da news says,
Not to mention that Uncle Ben still be supplying 80 Billion dutchies a month.
​

 

[FireWeatherMet]

For awhile we've talked about the QE4-Ever 80 billion/month backstop tempering the depth of any reversal.
An obvious pattern over the past 4 months is that no one wants to be a seller beyond the 50 day EMA.

All in all, unless something really bad happens on Monday, the worst may have passed and in the immortal words of Jim Cramer:

"You need to get in the game!!!!" :nuts:



View attachment 23454
​

 

[Boghie]

What happens when the FED reverses???
Could happen tomorrow...
Just a quarter pt.
Whistling.
:nuts:

 

[Boghie]

Also, the FED is buying longer term bonds and Treasuries - not equities.

I think the dead sideline money is flowing in, but how can one tell. If it is new Dumb Money I don't want to be part of it. If it is re-purposed Smart Money than I want my chips in the game. I don't know of a chart or a stat that separates those money flows. But, I don't think the monkeying around with mid-term gubmint debt really plays a role other than to get grandma back into equities. Maybe we will see Ben Bernanke on "American Greed" in the near future

 

[FireWeatherMet]

Not sure why my attached chart did not post from last Friday, but here it is again.
____________________________________________________________________________________________________

For awhile we've talked about the QE4-Ever 80 billion/month backstop tempering the depth of any reversal.
An obvious pattern over the past 4 months is that no one wants to be a seller beyond the 50 day EMA.

All in all, unless something really bad happens on Monday, the worst may have passed and in the immortal words of Jim Cramer:

"You need to get in the game!!!!" :nuts:



​

 

[FireWeatherMet]

Not worried...today is a "topless dip", meaning off a single high-point...so likely short term.

Cramer says..."The fall of commodities will be good for stocks...and our companies will have some really good numbers" (upcoming earning season)

So, with this commodity factoid, and Benny and the Fed keeping an 80 billion backstop every month...this fall should be shallow (again). Sound familiar?
This should shake out the weak hands, and am looking for new highs within the next 4-7 trading days.

This was part of a post from last Monday the 15th on this thread, on how to react to the market drop.

Today is day 6...and so far everything is working like clockwork.

Then again, even a broken clock is correct twice a day. :cheesy:

 

[FireWeatherMet]

Not worried...today is a "topless dip", meaning off a single high-point...so likely short term. And its still above the 20-day EMA on the S&P (1564).

Mainly panic over commodties free-falling and China's GDP growth "slowing" from an expected 8% to a paltry 7%. And commodity price falls may be a part of that China GDP drop..."producing commodities (raw materials) its a big part of China's economy.

The China thing should be forgotten very soon...if China had slowed form 8% to 4%, then that would be a different story. Otherwise it seems like a commodity fall is panicking the investor. But you may want to be soothed by what that might really mean for US stocks (read below).


Cramer: This 'Tipping Point' Great for Stocks

By Paul Toscano | CNBC – 1 hour 18 minutes ago


The commodity markets have reached a key turning point and U.S. equities will reap the benefits of lower costs as raw materials continue to slide, CNBC's Jim Cramer said Monday.

"We've reached some sort of tipping point where everyone just figures that every commodity just has to go down,... "

"Our country is a commodity taker, not a producer like China, and you're going to see a lot of our companies begin reporting really great numbers,..."

"The fall of commodities will be good for stocks, Cramer said. "When the rubble clears, the prices are coming down. We like gasoline going lower, isn't that a good thing? Gasoline is a tremendous tax on the American people..."


Cramer: This 'Tipping Point' Great for Stocks - Yahoo! Finance

So, with this commodity factoid, and Benny and the Fed keeping an 80 billion backstop every month...this fall should be shallow (again). Sound familiar?
This should shake out the weak hands, and am looking for new highs within the next 4-7 trading days.

Any questions??? :cheesy:

Everything is on track. Actually took 10 trading days to get to new highs instead of 7...but who's counting:cheesy:

Starting to look a little too steeply parabolic on the charts. May have to consider getting out briefly if Wednesday is a big up day (more that 1%) but would quickly re-enter.

 

[FireWeatherMet]

With sharp rise today combined with sharp 2 day rise to new highs...am "temporarily" exiting on a robust new high. "Nobody ever got hurt taking a profit" - Jim Cramer

All part of the plan, working like "Big Ben" clockwork...stay in till you reach a new high that is at least 1% above the old high...then save 2nd IFT for a better price.

Might jump back in as early as COB Monday if Monday has a sharp "profit taking" drop for no solid news reason.

 

[PLANO]

I did the same thing, cashed out to G today and expect to get back in next week. Hoping for a nice dip to buy and off we go for a little more.

 

[FireWeatherMet]

Exit into G COB today likely to only be temporary. A look at the charts says why (below)



A look at the solid trend-line since QE 4-Eva shows that we still did not hit it even with today's action.
However, given how parabolic upward we've been, and that Monday tends to sell off, figured better to bail a little early and catch a quick 1-2 day dip early this week.

Don't think we're near a top yet.
There has been a consistent 6-7 week periodicity between consecutive peaks (or troughs) the past 4 months.
With our last peak on April 11th, the charts say "next stop...May 25-30th...which following the trendline would put us at 1655-1665. However, the "sell in May" crowd could push this back a bit, so playing it safer, when I jump back in, I would anticipate getting out mid May...where the trendline says 1645.

No plan is perfect, and "Black Swan" news events wreak havoc when we're at new highs...but this is the plan nonetheless.

Have a great weekend...FWM