FireWeatherMet Account Talk

[FireWeatherMet]

We are currently at a critical point.
The S&P and Nasdaq/Russel all bouncing near the old June low.
Tom mentioned that this market action is trying to decide where the next big move will be.
Pivot Boss on his video showed that the open gap up about 3% from here might be a good short-term upward target. (see chart below)...IF we can hold today & close above 3650???
Problem is...if this bouncing near the old June low is setting the stage for the next big move being DOWN...then the long term channel gives a hint at what the next downward target might be.3250-ish, basically 10-12% down from here.



One thing that is worrisome...even though SP/Nasdaq/Small Caps still holding near the June lows, the DOW has pierced those lows, and its upward bounces are finding upward resistance at that olld low. (chart below).
Thats troubling, as there's often one market leader which leads the trend for the rest, and if its the DOW, then the other indices could soon follow.
There are huge global geopolitical ongoing events that might lead to that big turn being downward, ie: UK/Europe Gas situation, Esp Russia sabotaging current pipeline to drive gas prices up, and making regular nuclear threats to scare the West, which could also scare markets.
My system is set up to stay ahead of the stock indices, and in that respect, is acting wonderfully as I'm 15-20% ahead of the C/S/I funds BUT I never factored in a long term Bear Market, and I am trying to decide if I should make the "Best Fund" my current target...i.e. staying in the G and just making short term entries into stocks at possible short term bottom bounces.
Things have changed since my mid summer bullish stance, namely downward oil prices stopped being correlated with CPI, and FED killed any hopes of curbing rate hikes. The adage "Don't FIght the Fed" works both ways, and I might have to change my system strategy to account for that, as well as political uncertainty.
Next months CPI showing better drops and Putin being poisoned could be something to change the geopolitical uncertainties to a more bullish stance.

 

[LTJPFED]

Great points! Not a fan of the rounded tops in some of these charts as well. Between the H&S patterns toss in a bear flag or 2 and at least from the stand point of the charts, things don't look good.

I had a guess of 3200-3300 somewhere about a week or more ago. Really was hoping that would not happen. Not sure we get there but based on your chart it sure does look like that could be a target. I agree we are at a critical point. I'm hoping we get a couple/few more days of consolidation here. I'm leaning on bailing on my recent move simply because of all the things you've noted, basically confirming some things I've been thinking. Hope I get another day or two to see if we can get a small bounce. I'll take anything at this point.

Like you said if we can hold or basically hold enough to not break down yet, maybe we get another bounce that lasts for more than a day or two. But I don't think that will mean we are off to re-test any prior levels upward. Just so much negativity right now and as you pointed out the geopolitical aspects make me even more nervous.

Thank you for the charts!

 

[FireWeatherMet]

My hands are still bleeding from trying to catch that vicious "Falling Knife"!

Summary for the month, my system did well, beating the C Fund by about 3%...but that still hurts when you're negative by near 4%.
My system has worked really well this year, staying well ahead of the C/S/I by 15-20%....but I see its tailored for BULL Markets.

I think I need to change my target to the G-Fund for the rest of the year, at least till we get better news on Inflation...and Russian geopolitics calm down.
Don't see that happening in the next few weeks, so with the C up sharply this morning (who knows if it will hold into the close) I'll exit my 100% C position and go 100% G COB today.
However, I will stay vigilant on all oversold conditions for a quick 1-3 day jump in & out of equities...otherwise plan to stay in the G 90% of the time, unless something big changes the whole outlook.

Good luck to everyone!

 

[joblin20]

This has been helping me tremendously this year.

 

[FireWeatherMet]

Market was down sharply this AM but VIX was also down...often an indicator of a shift in market movement.
Since then, an hour later, Equities shot upwards into positive territory.
Will leave the G Lilly-pad and play with the "Houses Money" going 50% C but leaving 50% in G COB today with 1st Oct IFT.

 

[felixthecat]

I see the dollar took a good tumble today. Looks good at least for a short term rally for oil and stocks. Like you said…VIX even with new lows for stocks today did not budge much indicating some doubt the market would stick to the new lows. Off we go.

 

[FireWeatherMet]

With Market down again today over 1% near the trading deadline...and VIX only up a little (although these things can quickly change by COB), I'll roll the dice a little bit and change my allocation from being 50% in C, to all in, 100% C by COB today.

A possible target...the open gap that exists about 2% higher from here.

 

[Epic]

​...and with that move, the B.O.S. award goes to you for the day. Pretty bold move, especially on a Friday. Good Luck !!!

 

[FireWeatherMet]

Big Monster Up Day today (+2.5 to 3%)
Lots of "Big Monster Days" recently, both Up & Down...which worries me a bit. Also VIX down a little (about 2-3%) but usually with big up days that have staying power, the VIX falls like > 4%, so that worries me also.

Timing of going into stocks late last week seems to be near perfect...if I get out today, I'll lock in about 1.5% profit for October, so that's what I'll do.
In a Bear Market +1.50% is basically "Kicking the Field Goal for the Monthly Win".
Leaving 100% C position COB today and going 100% G with my 3rd Oct IFT.
WIll come back to the casino table in November.

 

[Boghie]

Never thought of my retirement assets as casino money... But, there is always a first time...

Anyway, early money is dumb money. This pop may last, but we will have to wait for the final hour. It is weird that both bonds and stocks are going up. Might be a sign of an actual bottom. To me, everything seems a bit oversold.

 

[FireWeatherMet]

Never thought of my retirement assets as casino money... But, there is always a first time...

.

Unless you're always in the G fund, if you are in a Bear Market, and you go into stocks, you are essentially going into a "Casino", and "betting" you can beat the House.
It's all about "Knowing when to hold em, knowing when to fold em, and knowing when to walk away (and lock in gains).
I'm walking away for now, in a Casino where if you stay in stocks for more than a few days, you're "fighting the Fed".
But always looking for "THE Bottom". Until the Fed hints that its lessening its attempt to kill the economy, that time isn't now IMHO.

 

[Boghie]

I am certain the FED would be increasing interest rates now even without inflation. They would probably be increasing them by a quarter point till they got to between 3% and 5% - which are normal FED fund rates.

However to fight inflation - the weakening of the dollar's value - they have to pull dollars out of the economy. If they don't we may go into hyper inflation. Nobody wants that.

Inflation = Bad
Hyper Inflation = Much worse than Bad
Deflation = Ugh, actually probably much worse than Hyper Inflation

The last three presidents have flooded the economy with cheap, borrowed, dollars. In 2009 - 2012 the FED helicoptered cash into the system - but that TARP money has been repaid. The FED is attempting to pull the excess inflated dollars out of the system. This is going to be ugly. The Federal government has to stop 'priming the pump' with more dollars. They are just making it worse.

 

[TommyIV]

The last three presidents have flooded the economy with cheap, borrowed, dollars. In 2009 - 2012 the FED helicoptered cash into the system - but that TARP money has been repaid. The FED is attempting to pull the excess inflated dollars out of the system. This is going to be ugly. The Federal government has to stop 'priming the pump' with more dollars. They are just making it worse.

Maybe we (as a society) should think about going back to the gold standard. It seems people in power (on both sides) with desire to get re-elected can't be trusted with such monetary policy power.

Or would we run the risk of deflation?

Critics of fiat currency point to the gold standard as an ideal blueprint, but without researching too deep I never hear about the negative consequences of the gold standard and why it was abandoned completely.

 

[Boghie]

Maybe we (as a society) should think about going back to the gold standard. It seems people in power (on both sides) with desire to get re-elected can't be trusted with such monetary policy power.

Or would we run the risk of deflation?

Critics of fiat currency point to the gold standard as an ideal blueprint, but without researching too deep I never hear about the negative consequences of the gold standard and why it was abandoned completely.

The recessions back in the days before the FED were horrific.

Math will fix the issues with our (remember, we vote for those 'people in power') politicians. We have been eating into the design margin for quite some time. Math is the great equalizer. It is very fair and equitable. At some point even the voters apply math and common sense. In this, the British might be the leading edge. They know the piper is coming. Their 'people in power' tried to give them a tax cut - the normal trope of 'conservative' 'people of power'. The market dumped and the tax cut was rescinded. Likewise, if some politician started promising student loan bailouts in England right now he/she would likely be dumped into the Thames. Math.

I kinda like the way the market behaved today. A few more days like this (a buy in and a nice and even hold - as of 1530) and I will move more to equities.

 

[JTH]

Timing of going into stocks late last week seems to be near perfect...if I get out today, I'll lock in about 1.5% profit for October, so that's what I'll do.

Nice entry/exit scalp, I'd take that setup All DAY LONG....

 

[FireWeatherMet]

Normally I would have stayed in stocks 1 more day, to get that open gap filled.
However with these huge 2-3% daily moves we've been having, my big worry was we would fill it intra-day, then fall sharply.
Day is still early and we could reverse this trend, but feeling better about exiting yesterday and locking in 1.6% for October.

Its tricky out there with big waves...good luck and be careful out there.

 

[FireWeatherMet]

Have been hibernating in the -G- since mid October, locking in a few percent in OCT but missing much of the continued rally.
I've learned "Not to Chase" the market, and was patiently waiting for a good entry point.
In Tom's discussions he occasioanlly mentioned the big Open Gap in mid November..and have been eying it ever since.

Well, our descent the last few days, along with this mornings big drop, have us just about there, almost filling that gap.
With the seasonality favoring low volume "Holiday Rallies" and reaching that big technical gap barrier...and it being a Friday, with momentum swings typical on Mondays, I've decided to catch the "falling knife". Hopefully my hands won't get too bloody.

Leaving 100% G position COB today (Fri) and going 100% C...with my 1st Dec IFT.

 

[Whipsaw]

Nice work!

 

[rangerray]

I’m living vicariously through you.


Scott Harrison
Senatobia, MS

 

[nasa1974]

Best of luck.