Griffin Account Talk

[AIF]

I'll try it a different way.

I have questions about channels.
If I look at the S&P chart and draw channels starting three years ago the picture looks like this and I see the possibility of a correction down to come back into the channel.

If I look at the time frame of the last seven months I get channels that look like the picture below and see the possibility of an upward trend to come back into this set of channels.

1) Are my Channels correct?
2) What are the rules for determining the channels?

I think I understand the concept of timeframes but where does smart money go? The longer timeframe shows caution but the shorter timefame says to me hold.

Any help is appreciated.
AIF

 

[mlk_man]

Channels are like ink blots, we all see something different. I've seen some guys on some newletters make very minute adjusts to their lines when something doesn't go there way and it presents a totally different picture. I use them as just a guideline myself to let me know of impending danger.

 

[AIF]

LOL. That's how I treat all the charts I look at.

 

[Griffin]

AIF,

There is no short answer to those questions.

I started with "Getting Started in Chart Patterns" with Bulkowski (makes sense huh )

It gets into channels, patterns and trend lines. I play a little fast and loose with "the rules". However, Bulkoswski spends a great deal of the book in pointing out that the TA process is predicting with accuracy (and usually without high degrees of it) not certainty. Which basically boils down to charting is as much a guideline as it is a hard fast system. Personally, I think there is a human element of "what makes sense in the big picture" that no process, model or system can capture.

Think of it this way. If you are the average Joe and you slap a few lines on a chart and develop what is probably and obvious pattern. How many others are going to do the same thing? The more people believe in a particular event, the more likely it is going to occurr. If a stock drops to the bottom of an obvious channel....lots of people will buy and the stock holds support and rebounds, therefore the channel is maintained. Subsequently, if you get to far in the weeds and nobody else sees what yor seeing then it's unlikely to materialize.

It's circular logic, what came first the chicken or the chart pattern? your charts are good, it's all about perception of reality, not reality itself. I hate to sound cryptic, but the decision to buy and hold is a function of the timeframes you choose. I move often, so I'm willing to continue to time up to the day the market pulls back, but that's me.

Your top chart spans four years. So my "human element question to you" is - was four years ago releveant to today? My answer would be, in the big picture, yes. It was the ending point for the tech bubble correction and the starting point of todays market. Four years ago, the US was very optimistic about the resolution of the war on terror. While that situation certainly hasn't improved, the market is slowing discounting the relevancy of Iraq, what is important is the impact on the oil market - and ultimately the oil is flowing as it was four years ago and needs to be, the terrorists lost the campaign to shut down the worlds oil market - and therefore we have victory. That is big picture, macro level stuff - doesn't mean we won't get a pullback today.

 

[AIF]

Griffin,

Thank you for your reply. I was spinning here!

All of your points are well taken and I agree with them.

I’ll continue to spin!

AIF

 

[VirginiaBob]

Why F instead of G? Could be a penny coming your way in the G. Just curious.

 

[Wheels]

Good luck to you on that move into the F. As has been the norm for you and lately, I am moving my 50F into the G today. I made a few cents in the F during the first few days of the year. Other than that, the F has been a losing proposition for every time with that one exception. The F fund is to me what the I fund is to Mlk what Moby is to Ahab.

 

[mlk_man]

The F fund is to me what the I fund is to Mlk what Moby is to Ahab.

What Saddam WAS to Bush...................

 

[WIND_HUNTER]

What Saddam WAS to Bush...................

What the Colts are to the Bears

 

[Griffin]

Dave,

Not quite sure how to take that, I've had a couple of good days here and there, but for the most part the past couple of months have not been ones for the resume. Plus, I'm getting spanked again.

TNX appears to setting up for a nice change in direction. I can't explain my fascination with the F-fund.

 

[ebbnflow]

...TNX appears to setting up for a nice change in direction. I can't explain my fascination with the F-fund.

Griffin, it's called FATAL ATTRACTION!

 

[Birchtree]

As a chartist you really have to admire the angle of ascent on the SPX, a beautiful 45 degree angle, very bullish and bottoms above bottoms continues to control the pattern. Snort.

 

[ayla]

Didn't know if you didn't see my post in the "Playing the I Fund" forum or whether you had me on "ignore" (LOL). Since I didn't get a response, thought I'd bring that over here cause I wanted to understand the cyclical pattern you describe. Sorry to be dense.

Also sorry to be so verbose but I've tried to spell out the questions specifically hoping to minimize the effort you need to make to respond. Since you are one of the best "explainers" on this board, thanks in advance for this as well as your words at other times.

Can you be specific about the cycle.
-- Were you talking about the "pop" yesterday? And were you expecting a nice return on the I fund today because of it (your words "good follow thru in the OSMs")? Was that what you meant?

--And therefore do you expect a nice gain in the I fund tomorrow with today representing the "delay" you mention?

--Didn't understand the "extra day to get out of the market"? Which market, OSM or USM? Are you thinking that since the OSM didn't pop today, it would have given us an "extra day" to get out of the I fund?

--"Before the consolidation starts" - do you think the consolidation will start tomorrow (or soon)?

After a couple of big up days, the reasonable expectation is that the market would form a top. We had good follow through in the OSMs, now we are just waiting on the dollar index to allow us to recieve our returns.

We have found ourselves in this position quite a bit with the I-fund over the past year and it's almost to the point of a becoming a cyclical pattern. That pattern is: the domestics pop, the OSM's follow through, and somewhere around day two or three we see the dollar index top and hold until the consolidation starts. The result is that sometimes the gains in the I-fund are delayed and diminished but we get an extra day to get out of the market before the consolidation starts, ultimately generating a better return for that rally.

Right now it appears that today is shaping up to be that extra day.

I have noticed that in most case's it is better to be in the domestic stocks at the start of any rally and switch to the foreign a day or two into it. Sometimes the dollar index works against you, but just as often, it creates an added opportunity.

Is this a figment of my imagination or are others seeing the same thing?

Sorry to be dense but I thought yesterday could be considered a "pop" for the USM. Looks like the I-Fund will be down today. I don't see that as a "follow thru" the way you are describing it, is it?

Or is this down day today (that may be in the neighborhood of 15 cents, have to wait for est from 350z), the "extra day"? Even though it seems like it will be down, do you mean that you think it will really be going down a whole lot MORE tomorrow if the cycle you describe holds true?

 

[airlift]

Ayla,
These are great questions. Once we get the pattern down pat, I suppose the markets will change the pattern on us just for the sake of it!

 

[Wheels]

Good luck to you on that move into the F. As has been the norm for you and lately, .

Dave,

Not quite sure how to take that, I've had a couple of good days here and there, but for the most part the past couple of months have not been ones for the resume. Plus, I'm getting spanked again.

That was supposed to read "Good luck to you on that move into the F. As has been the norm for you and I lately,".

I was sincerely wishing you luck with the F, I never have any luck with it (including today). I was also pointing out that over the last few days, you and I have been exactly opposite, and until today, that was to your benefit.

 

[Griffin]

Ayla, I try to never blow people off (but there is reality and big brother is watching). I did miss you comments though, sorry about that.

OK, This rally started Tuesday domestically right after the close of the OSMs. The domestics took off and the next day the OSMs matched.

The chart is a 5 day intraday, the FTSE is blue and the red is the DWCP (S-fund) first half of the day, this chart is only showing these funds while the London Stock Exchange is open.

See how the domestics opened Tuesday morning and brought the OSMs up? What you don't see is the US market after close of the LSE, trust me the US shot up, the FTSE followed the next day. This is the cyclical pattern I'm talking about.

View attachment 1308

Now check the I-fund thread, see that 350z is telling us 6 cent loss today in the I, this is because of the delay (we only got .3+% yesterday in the I, instead of a blowout like the S-fund which is what I meant by delayed and diminished), but that delay acts as a safety margin and is what is keeping us from getting crushed today in the I. Now if the dollar had taken a huge plunge today, we might actually have walked away from today completely unscathed even though the total global market will likely be in a world of hurt tomorrow.

Obviously the perfect play in this instance would have been two days in the S and out. But by moving to the I midstream of the rally, that safety margin became available. I don't think most of us anticipated today's self off. In fact, at close yesterday I expected today to be another boomer and that we would have an incredible day in the I. Does that make sense?

 

[ayla]

Does that make sense?

Thank you, thank you. I can't say I understand it yet. But you have spelled out things very clearly. I need to take some time to digest.

I agree that no one (or not many) seemed to suspect the market would tank today. Looking at the indicators I saw, I thought the S fund would be up for at least a couple of days (though not all at 1%.)

From what I have read, given the "tiredness" of this market, it will only take some little bit of news to set things off. Seems like there must have been a little bit of news today, perhaps the "foreign governments dumping US treasuries" as mentioned in the market thread.

Thanks again.

 

[350zCommTech]

Thank you, thank you. I can't say I understand it yet. But you have spelled out things very clearly. I need to take some time to digest.

Just think of it this way. Everybody follows the US, especially the Europeans.

 

[ayla]

Just think of it this way. Everybody follows the US, especially the Europeans.

Except the missing bit of info there is the fact that what time zone are you using to look at the following cyclical rise in the OSM. If I'm going to continue investing in the I fund, seems like it would be wise for me to find a better window to this action other than the Yahoo world indices page, I think.

 

[Griffin]

That was supposed to read "Good luck to you on that move into the F. As has been the norm for you and I lately,".

I was sincerely wishing you luck with the F, I never have any luck with it (including today). I was also pointing out that over the last few days, you and I have been exactly opposite, and until today, that was to your benefit.

Hopefully it won't be a total disaster, bond yields are at a 3 month high, they should drop tomorrow. Where are you at?