FogSailing's Account Talk

[FAB1]

I can't believe everyone is acting like everything is fine. I'm reading blogs and shaking my head because they are so bullish. It's nuts.
All the best.

FS

I think you are correct there.

But the market is fine today, real fine!

 

[Tsunami]

FS,

Regarding your NARFE inquiry, it's pretty clear that they didn't even read beyond the third sentence!

Regarding the market, if we're wrapping up a wave 2 rally then it's getting close to the end and your Friday mention of a target around 1950 is looking good. Right now it's in a little wave 4 for wave 4 of 5 of C...then comes one final jab higher to a peak late today or early tomorrow. If that doesn't happen, and especially if the Zweig Breath Thrust indicator triggers, then the bulls may really have something going here.

Right now the ZBT is in day 6, and needs to close above 0.615 this week to trigger the rare and very bullish signal...
$NYADV:$NYTOT - SharpCharts Workbench - StockCharts.com

Meanwhile I'm hunkered down in my bear cave awaiting the next storm, wondering what "bad" news will emerge tomorrow to trigger the start of wave 3 down, which could be the biggest wave of this tsunami/bear market. Back to sleep...

 

[FogSailing]

Hi Fab and TS:

I've been baffled at the amount of excitement by both the bulls and the bears. TS, we are probably using different counts (big surprise huh) ....but by my count, we just completed a flat ABC from the 1/20 low. This is one of the most basic of all EW patterns, and it’s baffled me how excited folks here got over the last 5 trading days. I label this the completion of a B wave, and if correct, then the next wave down will take out the 2/11 low and beyond.

As I'm posting this the VIX is rising from a low of 19.02 this am, SPX has been trading sideways all day since the gap up this morning, and we haven't breached 1947. That could all be consolidation and there is another leg up...but if those things hold through the close of todays session, I think we start the C wave pullback real soon - maybe tomorrow. I have that wave tracing down to 1780.

So many things on the radar can make this go in crazy directions: The Fed, The EU CB, Currency, China, Oil, N. Korea?) The ZBT is quite close to .615. Another exciting day tomorrow...sort of a new inflection point...which way will she go?

Enjoy that bear cave TS! I hope you're enjoying a nice cold beer and some tasty snacks as we lie in hibernation waiting for the next opportunity!

With respect to NARFE: Clearly dealing with a paper pusher with no understanding of the issues. Will resubmit a new email...a bit more pointed this time and look forward to the next response.

FS

 

[FogSailing]

Just an Update. I went back to NARFE with the following email. Let the games begin...
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Hello Mr. Reeves:

Thank you for your response but unfortunately I am not looking for a financial adviser. I am requesting that NARFE take up an important issue with the TSB Board and that issue is to petition for changes to the existing TSP system in a way that benefits all federal employees.

There are 2 main issues as I see it:

(a) The IFT deadline needs to be later in the day (3-4pm) so federal employees can make better informed decisions regarding their investments.

(b) That the number of IFTs (currently limited to 2 per month) needs to be increased to a more reasonable number (4 to 6 per month) to make the system work for employees instead of working against employees. As I mentioned in my prior email the TSP Board could charge a reasonable fee per transaction if cost is the reason for the IFT restriction.

I think NARFE could use your magazine to discuss the issues I've outlined with the current TSP system and get valuable input from current federal staff and retirees to gain the proper perspective for what opportunities should be explored with the TSP Board to improve the TSP.

Thank You,

FS

 

[FogSailing]

Hi Fab and TS:

As I'm posting this the VIX is rising from a low of 19.02 this am, SPX has been trading sideways all day since the gap up this morning, and we haven't breached 1947. That could all be consolidation and there is another leg up...but if those things hold through the close of todays session, I think we start the C wave pullback real soon - maybe tomorrow. I have that wave tracing down to 1780.

So many things on the radar can make this go in crazy directions: The Fed, The EU CB, Currency, China, Oil, N. Korea?) The ZBT is quite close to .615. Another exciting day tomorrow...sort of a new inflection point...which way will she go?

FS

After making some stupid poker moves last evening (enjoyed the game with super people nevertheless), I went back into my bear cave to think about todays action. I have been counting these waves as an ABC from the 1/20 lows. Last night I was reading a blog that has a different count and one that is just a reasonable, if perhaps not better reasoned. I was expecting the C wave to initiate a move down to 1780 before meeting resistance. However, the count I read last night shows the market pulling back to 1870 before moving up to the 2000 area. I'm posting it because it differs from my count and makes just as much sense, if not more. Best of luck out there today.

View attachment 37225

FS

 

[ravensfan]

I would be a buyer at 1870.

 

[Tsunami]

If this is a wave B, and that's entirely possible, it might not get as far as 1870...but I would love to see it take it's time and bottom on 3/1 so that poor souls like me who are out of IFTs can take advantage of the ensuing wave C up....which could easily get to 2000 (more and more this market is looking like the 2000-03 bear market I think, very unpredictable huge rallies, then comes the next panic, repeat over and over).

The problem I see though is that pretty much everyone is bullish now and will be jumping in expecting that next rally...so to me that tilts the odds that it won't happen and instead we're seeing the beginning of wave 3 down today. Either way I'm just watching other than in my non-TSP accounts.

 

[FogSailing]

Busy day today...18 holes of golf followed by beer and wings...sorry I missed the daily action (NOT)..

Based on a quick review of things though, it would appear that we are likely pulling back tomorrow. The real question is this an (a): limited pullback (say 1870-1900), or is it a (b): the beginning of a more serious pullback. In (a) the market looks like it could rally to 2000...some bulls say 2070. TS said it right in his post (everyone is bullish and waiting to jump on the rally) so "playing the cynic" makes me think (a) is going to be very tricky. BUT if (a) is the way forward expect a lot of chop and dirty water (EU banks, Greece, China, good and bad economic data, cats and dogs living together, etc.) I hesitate to say we're at (b) yet but I think we are getting close. Cliffs have ledges and sooner or later we'll arrive at it.

But my take today is this: The Saudi oil minister might have just ended the oil and stock rally with his comments today. “There will be no production cuts” – it doesn’t get any more clear than that, no room for misinterpretation there. This should end the production cut rumors once and for all. I've held from the beginning that the whole drama was based on hope and rumors. Iranians and Russians were never serious about cutting but why not go along with the news to gain a few more bucks in a tough market. Venezuelans and Ecuadorians are in for some serious hurt. Venezuela is on the brink of defaulting on their bonds within a year if oil keeps collapsing. How could we possible think an agreement is possible in the current context of rivalry between Russia/Iran and Saudi Arabia.

So, I think tomorrow oil prices decline and so does the market....at least to 1870-1900.

More to say but tomorrow is a new day....Best to all of you in your investing.

FS

 

[FogSailing]

A friend of mine sent me this article which I found very informative. Just FYI.

Warning with a Capital "W" | Hussman Funds | February 15, 2016

FS

 

[FogSailing]

This was just sent to me by NARFE....I don't like the answer because it is "BS" but here it is...
------------------------------------------------------------------------------------------------------------


Jon Dowie <jdowie@narfe.org>
6:29 AM (26 minutes ago)
to James, David, me

Categorize this message as:
Personal
Never show this again.

All,

I called a TSP employee and talked to her about the questions.
Neither suggestion can be implemented. She is sending information on why the time cannot be changed (related to how these fund are traded). More than 2 transactions per month (other than the flight to safety – moving funds to the G fund) they found would drive up costs for all participants and the demand was low. Even the cost to modify the system to allow for fees on additional transactions would cost in the tens of millions of dollars.

Jon

From: James (AL) Reeves
Sent: Tuesday, February 23, 2016 2:58 PM
To: Jon Dowie
Subject: FW: TSP Board

FYI:

From: David Snell
Sent: Tuesday, February 23, 2016 1:58 PM
To: James (AL) Reeves
Subject: RE: TSP Board

Al – I think Mr. Dowie sits on the TSP board. Why don’t you forward this to him and see what he says.

David B. Snell, Director
Federal Benefits Services Department

dsnell@NARFE.org
571-483-1269


From: James (AL) Reeves
Sent: Tuesday, February 23, 2016 8:11 AM
To: David Snell
Subject: TSP Board

Sir:

Is this something you feel NARFE can address????

Thanks

AL

------------------------------------------------------------------------------------------------------------------

I am requesting that NARFE take up an important issue with the TSB Board and that issue is to petition for changes to the existing TSP system in a way that benefits all federal employees.

There are 2 main issues as I see it:

(a) The IFT deadline needs to be later in the day (3-4pm) so federal employees can make better informed decisions regarding their investments.

(b) That the number of IFTs (currently limited to 2 per month) needs to be increased to a more reasonable number (4 to 6 per month) to make the system work for employees instead of working against employees. As I mentioned in my prior email the TSP Board could change a reasonable fee per transaction if cost is the reason for the IFT restriction.

I think NARFE could use your magazine to discuss the issues I've outlined with the current TSP system and get valuable input from current federal staff and retirees to gain the proper perspective for what opportunities should be explored with the TSP Board to improve the TSP.

Thank You,

-------------------------------------------------------------------------------------------------------------------------------------------

My thoughts - First, I believe the cost to implement a software change to reflect a fee for service is in the hundreds of thousands of dollars - not millions. Second. we (the feds) are losing millions and millions because the system refuses to make changes that work better for federal employees. This is making the case that we are better off with our money in a Roth 401(k) than in the TSP after retirement.

Just wanted to update all of you.

Thanks,

FS

 

[FogSailing]

My response to Mr. Dowie from NARFE
----------------------------------------------------------------------------------------------------------------------------------
Hello Mr. Dowie:

Thank you for responding to my inquiry. As a manager (now retired) of IT for the DOE, I understand IT solutions. I can say that "tens of millions" is not an accurate answer. I would very much appreciate seeing whatever information the TSP Board provides to NARFE. As a retired senior executive, I worked closely with the National Academy for Public Administration and I am aware of how things work in government.

In my humble opinion, federal employees are losing millions of dollars each year by not having better tools available. The TSP Board is already aware of the losses in holdings because those with higher value portfolios (especially retirees) are pulling and moving them to outside accounts.

I do think that most federal staff are uninformed regarding the TSP system and the markets and fail to optimize their TSP accounts, however the current slate of tools available to federal employees is not able to do the job in this sophisticated market environment. Things have changed dramatically since 1987 and the TSP needs updating. Improvement does require some level of investment.

Again, thank you for taking the time to make the inquiry. I appreciate all that NARFE does to protect our federal benefits.

Regards,

FS
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[burrocrat]

hmmm, some things to think about...

tsp administrative costs have risen dramatically since the 2 ift rule was introduced, evidence shows actively limiting ifts increases costs not lowers them, show us your books,

brokerages like schwab, scottrade, etc offer way lower administrative costs and real-time exchange traded funds (etf's) with unlimited free trades that parallel the c s & i funds plus much more,

the immediate answer from tsp gov was: "can't", "too expensive", "too difficult", "no time" (why does the free market always have a better solution than captive gov),

i am backing my tsp contributions back down to 5% for the free matching money and putting the rest in an ira instead, and as soon as i can get clear of this cumbersome, lumbering, blood-sucking dinosaur of a trading platform called tsp then i am taking it all out.

why bother.

 

[FogSailing]

Just an update. NARFE must want to NOT have to take this one on. They provided me this additional info that was provided to them from TSP. In my opinion it's the old "it's the system and we're not going to change it" argument which is a far cry from the attitude needed to make changes in the TSP. This isn't a criticism against NARFE, they do a super job in working to protect federal employees benefits but shows the level of intransigence that federal employees faced. The other problem is one that the TSP Board mentioned, namely that they aren't receiving a lot of active complaints from active feds so why should they change anything for a vocal few. It's an trend that needs to change if federal employees want to get the system improved.

Here is their response and my final email (at this time) on the subject:

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Here’s some of the additional info that the TSP provided.

ETAC Membership

Is laid out in statute at 8473 of title 5, U.S.C.

Trade Cut Off Time

The suggestion to change the noon cutoff time for an inter-fund transfer to be effective to 4:00 p.m. similarly would affect all participants in the TSP. If 4:00 were the time, the trade necessary to put the inter-fund transfer into effect would not be executed until the opening of the markets the next day. Any price differences between 4:00 p.m. and the next morning would be charged to the long term participants of the individual funds. Changing the time frame would also make it extremely difficult for the TSP run the necessary reports and ensure that participant account data was available first thing in the morning. The TSP is part of a retirement system, not a mutual fund, and as such has different rules guiding its operations.

IFT Monthly Limitation

The Federal Retirement Thrift Investment Board (Agency) published its final regulations limiting interfund transfers after a period of public comment. As the comments explain, the impetus for the Agency’s concern was a small population of participants who, together, were causing TSP transaction costs for all participants to rise rapidly in the fall of 2007. The Agency took this action to restrict this activity be-cause it diluted returns for other investors.

In 2007, the I Fund incurred trading costs of $16.5 million, while the F and C Funds incurred costs of $1.1 million and $605,000, respectively. For 2008, trading costs for the I Fund fell to $5.8 million, while the F Fund and C Fund incurred costs of $2.6 million and $1.9 million, respectively.

As a member of the ETAC I had asked if the Associations (Navy, Air Force, Army & Marine Corps) would be added to the ETAC since the size of TSP would about double due to the additions of the military in 2018 due to changes in military retirement system.

Thank you for your support.

Jon
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Hello Mr. Dowie:

Thank you for that information. I appreciate the TSP Board's information but would argue differently regarding some of their conclusions. Regardless of the constraints identified, the system lacks the flexibility needed for today's world and should be improved. One way is by providing a better set of tools to assist federal employees in managing risk within their individual retirement portfolios; however, there are many ways to get there. Hopefully there will be a way to make the system work better for all federal employees in the future.

Thank you again for your timely response. Again, I am very thankful for all NARFE does for the federal community.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

I've tried to get some attention and feel successful in that regard; however, single inquiries will not get the TSP Board EVER. It will take a concerted and organized effort to get someone like NARFE to take this on in a meaningful way.

FS

 

[FireWeatherMet]

I would be a buyer at 1870.

That would be a nice price, but unfortunately today's 1891 intra-day might have been as close as you'll get for awhile.

 

[FogSailing]

I'm not surprised by todays crazy action. We have to deal with what the market gives us. I have thought we were at an inflection point but just didn't know which way the market would break. Look around. Expectations are quite bullish.

To those that are bullish, beware a gap-up open tomorrow (say into the SPX 1,930’s but I'll be safe and give myself all the way to the 1956 pivot) and then expect a reversal. If this occurs we get a close below SPX 1,905 or so. I still think this action will continue as a choppy market for the next week. But once we cross over the right shoulder, I think it’s going to get painful real quick. Just as an aside Fed President Bullard will be co-hosting CNBC Squawk Box tomorrow 3 days before month end. So the central banks now take center stage through March 10th. Let the Games Begin!

I was wondering what triggered todays action and found an analyst who made this observation: "So far, today’s rally appears to be a reaction from an extreme oversold condition this a.m. – granted it’s more anybody expected. Break SPX 1,960 and you’ll get my attention, but I'd say we're close to heading lower."

FS

 

[burrocrat]

Trade Cut Off Time

The suggestion to change the noon cutoff time for an inter-fund transfer to be effective to 4:00 p.m. similarly would affect all participants in the TSP. If 4:00 were the time, the trade necessary to put the inter-fund transfer into effect would not be executed until the opening of the markets the next day. Any price differences between 4:00 p.m. and the next morning would be charged to the long term participants of the individual funds. Changing the time frame would also make it extremely difficult for the TSP run the necessary reports and ensure that participant account data was available first thing in the morning. The TSP is part of a retirement system, not a mutual fund, and as such has different rules guiding its operations.

translation:
a) not 'a' time but any time (real time, like the stock market), but we'll pick 'the' time to use an example to sow fear and extreme extension of reasoning...
b) it is hard and expensive to run reports
c) part of a retirement system (oh really? shoot here all this time when allocating funds to c-, s-, and i-funds i thought i was investing in the stock market with my money, it goes up and down like a stock market anyways, doesn't it?)

reread the last part, it is important. your money you choose and decide to expose to stock market risk is not yours and not in the stock market, it is part of a managed retirement system. think about this.

IFT Monthly Limitation

The Federal Retirement Thrift Investment Board (Agency) published its final regulations limiting interfund transfers after a period of public comment. As the comments explain, the impetus for the Agency’s concern was a small population of participants who, together, were causing TSP transaction costs for all participants to rise rapidly in the fall of 2007. The Agency took this action to restrict this activity be-cause it diluted returns for other investors.

translation:
a) more confirmation you are not trading stocks in a real market, let alone realtime. charles schwab and scottrade do not lose money no matter who trades or how often, a trade costs what a trade costs. but with tsp, 90% probably buy and hold so blackrock the tsp contracted manager of your 'retirement system' as they call it experiences huge savings there with none or limited trades by a vast majority of participants sometimes for years or even decades, to blame costs on a small percentage of folks who expect to be able to make decisions about their own money is disengenious. the question occurs to me, what is blackrock getting paid to manage then, if nobody is moving money why not just park it and let it sit? if nobody hardly ever trades, why are we paying you to manage non-trades?

In 2007, the I Fund incurred trading costs of $16.5 million, while the F and C Funds incurred costs of $1.1 million and $605,000, respectively. For 2008, trading costs for the I Fund fell to $5.8 million, while the F Fund and C Fund incurred costs of $2.6 million and $1.9 million, respectively.

show us the books. 'management' (actually non-management it seems) costs have increased significantly since implementing the 2 ift limit rule. explain that. where does the money go? show your books.

As a member of the ETAC I had asked if the Associations (Navy, Air Force, Army & Marine Corps) would be added to the ETAC since the size of TSP would about double due to the additions of the military in 2018 due to changes in military retirement system.

Thank you for your support.

Jon

translation: i am not going to help you, but i asked about service members so i want you to think i care, see?


here is the deal folks:

your money is held captive by a system that purports to offer benefits of a stock market but manages and limits your funds on your behalf (we cannot let you trade because you might hurt yourself). that implies a fiduciary duty on behalf of the tsp.gov board and corporations they contract with to 'safeguard' your assets. it would be very difficult i think to prove that the way the tsp is managed either safeguards your funds, offers you managed risk, or is ultimately for your benefit.

someone sure benefits though... the tsp board and their generous salaries, blackrock from a lucrative management contract, and who knows who else or even how? but i can tell you this: if you let me manage a pool of funds even 1% of the size of the tsp, and hardly anybody ever trades, and when they do they buy at noon but let me tell them what price they got after i enjoyed a 4 hour head start on the 'market' while the moneys were in motion, i will be filthy stinkin rich!

think about it. the little guy is never going to win this battle by petitioning or calling or writing letters. there is too much big money at stake for somebody other than you, but they do it with your money. get used to it.

i am doing 5% only to get the match. and that is all the bloodticks get of my money to scheme with. and i will take it out at my earliest tax beneficial opportunity. calling someone a crook would be libel if not able to prove it so i won't say that. but it is a fair and legitimate observation to note that something seems like it could be shady.

 

[FogSailing]

Another strange day...I'll just call it "upward" consolidation. Feels kind of lackadaisical; like tipping through tulips. Glad to see factory orders up but with the Yen down and Oil down, it is surprising to see SPX trading in the Green. For the last 2 days the market has pulled backed and rallied. Kind of makes me wonder what happens when it breaks the 50dma. Talk about folks getting bullish. Obviously lots more going on behind the scenes. Maybe folks are bullish before the central banks do their thing. Right now it looks like scenario (a) that I spoke about a few days ago is playing out with the market moving upward. This was proposed by an analyst I follow and posted over the weekend. I did not think this was the path the market would take however. I still don't think we'll get to 2000 but will likely break 1956. I was hoping this rally would be slower so I could get a piece of the action in early March but the way this is moving that is going to be a real close shave.

Here's a few pictures of where we are:

View attachment 37261

View attachment 37262

FS

 

[FogSailing]

I saw this posted today in an analysts blog and it made me LOL. It explains everything:

"Yellen is letting everyone know she s woken up from her nap and bought some oil."
Sincerely,
Plunge Protection Team

On a serious note, the market is still overbought so I can still see a fade up to 1970 by Monday. Oil prices seem to be melting up. I'm still really perplexed by the markets behavior. What are we not seeing?

Major C down is where I thought we would be from…well, from here (but clearly not yet). Plus we see a big bear flag on the charts, a head-fake in the making right now is possible, and weak volume. I just don’t buy this rally, and when it has pulled in enough suckers by going *just* high enough…that’s when the rug will gets pulled out from under them.

My guess is (because of where we currently are) and because of the central bank focus through March 10th, the market will find a choppy way to move side and up but make a buck through the first week of March.

FWIW, today’s ZBT reading is 0.596. tomorrow is day 10.. we'll see if bulls can pull it off.

But I'm way too late to this party and I'll have to wait for the next opportunity.

FS

 

[FogSailing]

Looking at this week...Wednesday's reversal changed everything for me, as it was the first time since the November high that the market did something that was COMPLETELY unexpected to me. It’s not often (as in almost never,) that the perfect setup that existed on Monday results in a market reversal. However, the world that we live in today is one that’s governed by the oil market, and when oil reversed at 10:30am Wednesday morning, then the stock market was forced to take a detour. Sometime ago I noted that the double bottom at 1812 looked eerily similar to the double bottom of last August-September. That previous formation led to an extended flat. I didn’t think the market had enough juice to put in another extended flat, but it’s certainly a possibility now. Of course, it’s also a possibility that the whole thing is almost done. Nevertheless, because of my uncertainty of where we are, then I’m going to remain flat until the picture clears up.

To the news: Best performing sectors this year are: consumer staples, telecom & utilities. All bear market sectors where long-only managers hide. I don't think that the market will not be lead higher by Coke, Spam, Verizon, pizza and cigarettes: but what do I know...maybe Coke is the new Oil! If I were in, I'd exit my position today. Just one more thought: GDP was raised up to 1% (4th Qtr), inflation number is up, and now we wait for employment numbers. Rate hike anyone?

All the best to you in your investing.

FS

 

[FogSailing]

So....back to that seasonally adjusted GDP number...

Here is a segment from David Larew's Thursday commentary. Makes you wonder if there are unqualified statisticians keeping the books, or is someone is "Cookin the Books".

View attachment 37304

I expect a lot of "dumb money" is going into the market on March 1st so the "turn of the month effect could be present but is it going to be diminished by the weekend effect on Monday? I think so but so does everyone else. If it plays out like the herd expects Tuesday through Thursday will be up days. My guess is that volume will be up because the smart money will use that chance to exit positions. Just my guess...All of this will be overshadowed by the central banks and Super Tuesday.

Terms:

•Weekend Effect: The weekend effect describes the tendency of stock prices to decrease on Mondays, meaning that closing prices on Monday are lower than closing prices on the previous Friday. For some unknown reason, returns on Mondays have been consistently lower than every other day of the week. In fact, Monday is the only weekday with a negative average rate of return.

Years Monday Tuesday Wednesday Thursday Friday
1950-2004 -0.072% 0.032% 0.089% 0.041% 0.080%

Source: Fundamentals of Investments, McGraw Hill, 2006

•Turn-of-the-Month Effect: The turn-of-the-month effect refers to the tendency of stock prices to rise on the last trading day of the month and the first three trading days of the next month.

Years Turn of the Month Rest of Days
1962-2004 0.138% 0.024%

Source: Fundamentals of Investments, McGraw Hill, 2006

Read more: Making Sense Of Market Anomalies | Investopedia Making Sense Of Market Anomalies | Investopedia

All the best in your investing!

FS