Griffin Account Talk

[Griffin]

I'm staying in the I-fund for the day. It seems that the market is starting to like these earnings reports. I think we could see a slow climb domestically, nothing explosive, just that usual postering before an important report (PPI), with just enough positive action to let the I-fund catch up.

 

[Griffin]

PPI, CPI and the Beige, housing, initial claims and the Philly Fed book reports are due this week. The numbers being projected at Yahoo are not particularly good.

http://biz.yahoo.com/c/e.html

The predictions are indicitive of a soft landing and help pave the way towards a Fed rate drop. The most I would hope for out of the next meeting would be a unanimous decision to hold the rate even. The market could see things differently and actually be disappointed if we don't get a cut. I don't think we are quite to that point of anticipation. The earnings reports seem to be coming in solid enough to dismiss an impending recession. Well's Fargo is showing good earning despite the lower demand for mortgages.

With all that said, I do not fear this weeks reports. I am going to be aggressive.

Last note, I have decided that I am going back to last years strategy of managing things from a multi day perspective and abandon the "long term critical points" approach. However, I may go to a multifund approach.

 

[Griffin]

I'm moving to the F-fund not as a defensive move but because I believe we will get good numbers and have a very positive day for bonds, while the stocks funds twiddle their thumbs. This is intended as a one day move, then I will get back into stocks. This has nothing to do with what is happening today.

 

[Griffin]

Stuck on important business (yeah right....sounds good though) and missed the opportunity to move back into the I-Fund.

There is room in the 6 month channel to both the upside and the downside. Given the positive PPI numbers, the Beige book and earnings reports (Intel being the big exception of the day), I am bit suprised the market has not found a foot hold for the next push. Today's news was very chipper. I am actually a bit concerned about jumping back in at the moment. If the CPI numbers are good and we don't get a decent rally, I will become very concerned. I think it's fairly safe to say the Fed is going to hold. Their policy is working - I'm not sure that there is a whole lot of anticipation left around those numbers and the next move (which does not happen for another two weeks). I expected more controversy out of today.

Ultimately, when the news is all green lights, I'd expect the market to pull back and were getting closer to that point. If you don't understand this logic here it is: If we get decent CPI numbers tomorrow, the only thing left the market could hope for is a fed rate drop and some incredible earnings reports and it is widely held those are unreal expectations. Investors would have no reason to expect things to get better and therefore produce a return on new positions. The buying pressure drops and the selling pressure dominates.

i.e. Goldilocks may have run her course, unless we get into the same game as last year. The difference being the anticipation focused on rate hikes rather then rate halts. Just like last May, that train can only run so far.

Tomorrow should be interesting. Bad news may actually be good for the market and vice versa.

 

[350zCommTech]

I think it's fairly safe to say the Fed is going to hold. Their policy is working - I'm not sure that there is a whole lot of anticipation left around those numbers and the next move (which does not happen for another two weeks). I expected more controversy out of today.

If we get decent CPI numbers tomorrow, the only thing left the market could hope for is a fed rate drop and some incredible earnings reports and it is widely held those are unreal expectations. Investors would have no reason to expect things to get better and therefore produce a return on new positions. The buying pressure drops and the selling pressure dominates.

Tomorrow should be interesting. Bad news may actually be good for the market and vice versa.

Griffin,

I completely agree with you about the market wanting a rate cut in a bad way. The problem is that the Feds will not lower rates until it's too late. They will wait for negative job numbers and/or 0% GDP. All the talk about inflation is nothing but "yak". If they rasie the rate, it'll be the last nail in the coffin for homebuilders and home owners with ARMS and negative mortgages. I jumped back in hoping for good earnings and a lower dollar.

 

[Wheels]

Today's news was very chipper.

I think your logic is skewed by a weak premise. I didn't find today's news chipper at all. You mentioned Intel. But then there's PPI. While the core was in line the front line number was very high and the year over year was higher than last month as well. Then there was capacity utilization which was very high. Both seemed to indicate that the Fed is correct in still worrying about inflation and there will no easing anytime soon. The Beige book was mixed at best. Apple will be huge tonight.

 

[Griffin]

Dave,

Maybe the picture I painted was a little too rosey, but the market is not responding to those numbers. Things are not perfect, but the situation is reversing from what was being painted as the nightmare scenario.

The nightmare scenario is high inflation and low growth. The fear is that despite the Fed's efforts, we will see high inflation continue and, due to the housing bubble burst, the economy slip into a recession. Neither of those things appear to be occurring.

As I am writing this, the market is slipping into the red. Is this because the economic picture is bad, or is it because there is little room improvement at this juncture? Yes, things could be more perfect, but by how much and in what time frame?

Cap. Utilization at 81% is......what? nothing? neither inflationary or weak? Housing's good, unemployement's good. I'm not sure where you see the weak link?

I guess to debunk my hypothesis, I'm looking for a reason why economic conditions could significantly improve, attracting more buying.

http://biz.yahoo.com/ap/070118/economy.html?.v=7

 

[Griffin]

This is what I was trying to hint at yesterday.

http://biz.yahoo.com/ap/070118/wall_street.html?.v=23

 

[Griffin]

Griffin,

I completely agree with you about the market wanting a rate cut in a bad way. The problem is that the Feds will not lower rates until it's too late. They will wait for negative job numbers and/or 0% GDP. All the talk about inflation is nothing but "yak". If they rasie the rate, it'll be the last nail in the coffin for homebuilders and home owners with ARMS and negative mortgages. I jumped back in hoping for good earnings and a lower dollar.

350z,

Under a Greenspan led Fed, I would be making the same assumption. However, Bernake may be a little more responsive to changing conditions. Back in May, the talking heads were saying that the Fed would hike to 6.0% and crush the economy. That didn't happen and they are allowing the current rates to run their course. I'm sure the corporate types will be screaming for a rate drop long before the Fed is willing to go down that path. Don't let the "yak" cause you to make risky decisions, but that is easier said then done. I consider inflation to be a serious issue and I am supportive of the Fed's stance on inflation as it is currently being addressed.

 

[Griffin]

I'm bummed about missing the move back into the I yesterday, but life goes on. I'm still sitting in the F-fund and now I'm looking for an opportunity to slip back into stocks.

Today's bounce in the I-fund evens the score between it and the S-fund, putting the dollar index back in the driver's seat. I'm now looking for a new good buying opportunity. As long as the trend is up and sub-model J stays on a buy, I will stay aggressive. I expect to move on Monday.

 

[Fivetears]

There’re at least 50 more 1% days to grab over the course of the year, as you well know. No need to be bummed my friend. They'll probably take most of it back on Monday. It just seems to work that way; all T/A aside.

 

[Griffin]

Rokid's tracker has me at #81, slightly below the half way mark. I haven't played the whipsaw well, but I'm doing ok. If that puts me at #81 then I think the year is off to a good start for the board as a whole. Congrats to our current leaders....don't let your guard down, I'm just getting started

I would really like to get some satisfaction out of the F-fund before I move back into stocks, but with my history, I expect it to bounce the day after I move out. ....and that's looking like today. Betting against the bulls has not been a winning scenario (although my move into the F was on an expectation of a solid move in the F-fund, not a defensive move).

It's mostly a flip of the coin between the I and the S. I have a hunch (that should make somebody happy, I forget who)....that the dollar has got a little more momentum to the upside in the next couple of days. The S-fund is looking like my fund of choice for the next couple of days. I also like going into any rally in the domestics, because of the opportunity to catch some lagging action in the internationals on the top side.

 

[Gritz]

Looks like you'll get your F satisfaction today. Not sure about the S for tomorrow unless it's a feline bounce; S appears to be on track for testing the 20dma supports, but the one day bounce may be there. Wonder what Bush's history is for market reaction after state of the union? Good fortune, Griffin!

 

[Wheels]

I would really like to get some satisfaction out of the F-fund before I move back into stocks, but with my history, I expect it to bounce the day after I move out. ....and that's looking like today. Betting against the bulls has not been a winning scenario (although my move into the F was on an expectation of a solid move in the F-fund, not a defensive move).

It's mostly a flip of the coin between the I and the S. I have a hunch (that should make somebody happy, I forget who)....that the dollar has got a little more momentum to the upside in the next couple of days. The S-fund is looking like my fund of choice for the next couple of days. I also like going into any rally in the domestics, because of the opportunity to catch some lagging action in the internationals on the top side.

Yikes. I was just crediting you in another thread for teaching me that it's OK to get out of a fund on big down day and then I read that you are jumping in. And to make it worse I put some into the F which you are jumping out of. Guess you and I are not on the same page.

I may get back into the I quickly. I feel like the yen's decline has been pretty much uninterupted and is way overdue for some strength against the dollar, but tomorrw was setting up as a big down day in Asia at least so I didn't want any part of it for tomorrow.

 

[Griffin]

Dave,
Reread my post - I'm leaving the F, it will probably bounce 5 cents tomorrow .

Getting out on a big down day is a good thing - if the next day is going to be another down day. The true test of having the capital preservation guts is the ability to suck up a loss and get out without riding the market to the bottom. That is a skill that will save you when the big ones come.

As much as we all know a correction is coming, it's just seems to be eluding us. I have sold off on several big down days over the past couple of months, usually, when I see a significant support level compromised. This market wants to go up, but it just needs a reason. Any consolidation is giving it that reason.

In the past, selling off wasn't the mistake, waiting to long to get back on board, when a pullback didn't materialize is where I got myself into trouble.

 

[Griffin]

Looks like you'll get your F satisfaction today. Not sure about the S for tomorrow unless it's a feline bounce; S appears to be on track for testing the 20dma supports, but the one day bounce may be there. Wonder what Bush's history is for market reaction after state of the union? Good fortune, Griffin!

Gritz,

Last year the SotUA was held at the end of the month. It was delivered right after a few solid green days that were the recovery from the Livedoor incident sell off (which happened in the middle of January). in the days to follow the SotUA, the market held firm the next day and then slipped back into the red.

GW is well on his way to being a lame duck for the rest of his presidency, so I doubt he will be too controversial. He simply can not afford to alienate any more republican consitutency. Also, he will avoid talk about Iraq as much as possible. Mostly, he will try and tie the conflict to "the greater growing threat". Ultimately, it will be political aspirin at best. He will focus on the birght spot - the economy - so it could be good for the market.

 

[VirginiaBob]

I don't know, I've heard some left leaning folks saying GW is a lame duck, and others on the left say he is "armed and dangerous". Depends who you talk to.

 

[Griffin]

I don't know, I've heard some left leaning folks saying GW is a lame duck, and others on the left say he is "armed and dangerous". Depends who you talk to.

"The armed and dangerous" fanatical rantings from the far left, is an excuse to cattle prod GW while they have him over the barrel, and the Republican hopeful's aren't going to stop it.

I personally view it as a shame. GW's handling of the aftermath of 9/11 was inspiring. I believe he was well on his way to being one of the greatest president's in this country's history. I clearly remember when the talk of going into Iraq started. I was blown away, it did not make sense to me at the time but when Powell said it had to be done, I trusted him. When Powell resigned, I knew we were screwed. Then the General Officer resignation requests were the final straw for me.

I blame it on the inability to do monkey math - if a contractor costs $200K a year and a soldier costs $50K a year, we have 35K contractors in country, and were short about 100-200K soldiers to execute the mission with absolute authority, it kind of works out. If any good has come out of this, I doubt you will ever see another Sec Def try to tell the American people that we can fight a war on the cheap.

 

[Griffin]

I'm puzzeled about the two cents in the I-fund. The mid-afternoon rally bounced off support. Tom mentioned that the recent highs are going to provide a strong level of resistance and I agree with Tom. This of course sets us up for a pennant formation to develop which is a continuation pattern. Depending on when the pennant breaks, we could get whipped around here over the next few days. Probably won't feel anybetter being in the market then it did being out. I may try to play the whip.

Obviously, the trend going into the beginning of this pattern was up, so the expectation would be another rally. According to stockcharts.com: I will be looking for unusually heavy volume as my indicator. However, the volume has been so heavy lately that any attempt at distinguishing a uniquely heavy day may be a lost cause.

http://stockcharts.com/education/ChartAnalysis/flagPennant.html

To go into February on another rally would really shock the shorts off of most people, which is why I am going to stay aggressive, and keep my CP time to a minimum. If there is one thing I do agree with Birch about, it's that the Bull likes to buck.

 

[fabijo]

Tom mentioned that the recent highs are going to provide a strong level of resistance and I agree with Tom.

Which means this resistance will most likely serve as support one day. When that day is, who knows. Could be later this year, or in a few years.