Griffin Account Talk

[Griffin]

Things have definitely taken a turn for the worse in the past hour and the EU is now participating in what looks like the makings of a global sell off. I suppose Asia will get sucked into this vortex tonight. Unless I see something that looks like support I will hold off on the dip buy, at this stage the risk vs reward is not quite where I want it to be.

In the previous post, I compared what is happening today to early 2006. As you may recall, in mid January we had the Livedoor incident in which the Tokyo Stock Exchange ignited a global sell off. The market floundered for week then rallied, only to lose ground through the early part of February as concerns over the Fed course of action and it's new chairmen weighed on the market. Ultimately, the economic news was only a catalyst for the much larger issue of the Fed action (that was when the debate to hold or continue hiking was starting to reach critical mass). Now we find ourselves approaching a similar situation. The economic reports have been continuing to discount any hopes of a Fed rate reduction. Along comes this bond issue and throws a wrench in the works. Uncertainty may keep the market floundering, but if the Fed reduces rates and we now have a un-inverted yield curve (after six quarters), we could be looking at a monster rally before the end of the month. That of course would put me on the defensive going into July as the second quarter wraps up and we get some significant profit taking.

What it boils down to is I am looking for an entry point real soon, which I will stick out through the FOMC. If all goes well, I will be looking to exit again approaching the end of the month. This is a tentative model, I will use as the foundation for my decision making over the next couple of weeks.

 

[ATCJeff]

Things have definitely taken a turn for the worse in the past hour and the EU is now participating in what looks like the makings of a global sell off. I suppose Asia will get sucked into this vortex tonight. Unless I see something that looks like support I will hold off on the dip buy, at this stage the risk vs reward is not quite where I want it to be.

In the previous post, I compared what is happening today to early 2006. As you may recall, in mid January we had the Livedoor incident in which the Tokyo Stock Exchange ignited a global sell off. The market floundered for week then rallied, only to lose ground through the early part of February as concerns over the Fed course of action and it's new chairmen weighed on the market. Ultimately, the economic news was only a catalyst for the much larger issue of the Fed action (that was when the debate to hold or continue hiking was starting to reach critical mass). Now we find ourselves approaching a similar situation. The economic reports have been continuing to discount any hopes of a Fed rate reduction. Along comes this bond issue and throws a wrench in the works. Uncertainty may keep the market floundering, but if the Fed reduces rates and we now have a un-inverted yield curve (after six quarters), we could be looking at a monster rally before the end of the month. That of course would put me on the defensive going into July as the second quarter wraps up and we get some significant profit taking.

What it boils down to is I am looking for an entry point real soon, which I will stick out through the FOMC. If all goes well, I will be looking to exit again approaching the end of the month. This is a tentative model, I will use as the foundation for my decision making over the next couple of weeks.

I agree. I got in one day to early again. But I will remain in on the hopes that the FOMC meeting next week results in a rate cut. I don't know how that could happen with the threat of inflation still in the air. This situation with the bonds that Tom's brought up is new to me. I'm learning.

There is chance I may reduce my exposure if we are down at teh cut-off.

 

[Griffin]

I agree. I got in one day to early again. But I will remain in on the hopes that the FOMC meeting next week results in a rate cut. I don't know how that could happen with the threat of inflation still in the air. This situation with the bonds that Tom's brought up is new to me. I'm learning.

There is chance I may reduce my exposure if we are down at teh cut-off.

I spent sometime last night digging through the web trying to get smart on inverted yield curves, short term intrest rates and the Fed. Can't say I mastered anything, but I was able to gleen enough to understand why this bond situation is going to put the Fed in an awkward position. Maybe someone out there can give us a 101 lesson in bonds and the Fed.

Anyway, I obviously expected more to the down side today based on my last couple of comments but I remain flexible and I am buying the dip. Moved 100%S.

 

[Griffin]

CNN has an article which attributes Friday's sell off to the sub-primes again via hedge funds. Haven't we heard enough about sub-primes and hedge funds....big risk/big rewards/big losses....yeah we get it....No one seems all that concerned that sub-prime problems will filter into the general market.

http://money.cnn.com/2007/06/24/markets/bc.column.stocks.outlook.reut/index.htm

I'm in stocks and I expect to remain here through the FOMC meeting.

 

[Griffin]

Continuing with the comparison to early 2006 and the model I previously discussed - the market has indeed floundered for a couple of days. I really wanted to catch the last rally of the 2nd quarter and be out of stocks before the end of the month (i.e. the plan was to be out after "The FOMC Rally" which may still come). However, I am going on vacation in a couple of days and if it does not materialize by this Thursday, then I will ride out the end of the 2nd quarter in stocks through to sometime after the 4th of July.

I expect to go off the net tomorrow night.

 

[Griffin]

At the end of this last calendar (06-07) year and going into Januay, the market did something similar to what we have seen the past couple of weeks. It appeared to be rolling over, then it took off again. But that was the stronger six months - I'm not confident that the same thing will happen again.

Also, going back to early 06, we saw a similar pattern develop in the charts - that eventually lead to a bump and run which ultimately ended with last May's pullback.

That's big picture stuff, right now I'm worried about new highs. If we don't get them, then we could see this market roll over. I think we have a couple of green days on tap (I expect the Fed to keep the status quo and for the market to react positively), but they will just get us to the level of the previous highs. That leaves us somewhere early next week trying to guess if the next consolidation is a precursor to new highs or is the beginning of the market rolling over. I expect the first couple of days of the new quarter to be very volatile as the big boys redistribute their risk. If we get through the start of the new quarter moving higher, then I would consider the seasonality play going into the end of the week.

This is likely my last post for the next week or so, and I'm banking that we stay generally green. Good luck everyone. It's off to the hills for me.

This also fits well with the seasonality charts surrounding the Fourth of July and for the month of July. Based on seasonality alone, it looks like Monday July 9 is about the last green day before things start to roll downhill.

 

[Griffin]

This also fits well with the seasonality charts surrounding the Fourth of July and for the month of July. Based on seasonality alone, it looks like Monday July 9 is about the last green day before things start to roll downhill.

Paladin,

You've got to be feeling good about the way you played this. Staying with the seasonality, are you going to look to grab the big green day 9? - That would be a one day IFT Thursday for Friday's action - i.e. the dead cat bounce?

I'm thinking I just might give it a shot - let's see how today play's out first, but I'm definitely staying put in the G today.

 

[qibovin]

...big green day 8? - IFT tomorrow for Thursday's action...dead cat bounce

Grif, what seasonality data are you looking at? Tom's chart in today's comments and previous posts have shown the only green day for the next couple weeks as trading day 9. That would be an IFT Thursday for Friday's market. Am I missing something, because I was leaning toward playing this, too, but if there's conflicting data as to the timing, that would affect my decision considerably, particularly since the G fund will probably pay this Friday.

 

[Griffin]

I might move in tomorrow, we should cover the vast majority of the downside movement today and tomorrow. Moving in for Thursday probably won't result in anything more then a small loss, and this gives a much better chance of catching the bounce, in case it does come very quickly - it's earning season and the action is going to be volatile.

 

[Griffin]

I hit the submit before I verified my info - made the change already - for those that didn't catch that - when I began the comment I thought day 8 was the green day so, qibovin's comment is not off base.

Grif, what seasonality data are you looking at? Tom's chart in today's comments and previous posts have shown the only green day for the next couple weeks as trading day 9. That would be an IFT Thursday for Friday's market. Am I missing something, because I was leaning toward playing this, too, but if there's conflicting data as to the timing, that would affect my decision considerably, particularly since the G fund will probably pay this Friday.

 

[ATCJeff]

I might move in tomorrow, we should cover the vast majority of the downside movement today and tomorrow. Moving in for Thursday probably won't result in anything more then a small loss, and this gives a much better chance of catching the bounce, in case it does come very quickly - it's earning season and the action is going to be volatile.

I agree. Here lately we have been having three days down then a turn-around. Thinking of moving only half in for Thursday, then all-in for Friday. S fund will probably be the fund I choose.

 

[Griffin]

I agree. Here lately we have been having three days down then a turn-around. Thinking of moving only half in for Thursday, then all-in for Friday. S fund will probably be the fund I choose.

I was actually thinking of going with the C-fund, given some of the discussions that have been going on that Tom referenced a few days ago.

 

[Griffin]

The dollar index is heading down hard, and has rebounded from these drop quite significantly.

If you hold true to the seasonality day 9 model and given the FV's we have seen.

If you wanted to get into the I-fund for the dead cat bounce, you would really want to move today or tomorrow - problem is, this dollar drop is going to keep the I fund from hitting rock bottom and may actually serve to prevent a FV if today's afternoon session deteriorates modestly. On the other hand, waiting a day could mean buying into the I-fund just as the dollar index rebounds.

While an I-fund move can produce the double whammy, the risks are way to high for me, when all I am looking at is catching a piece of a dead cat bounce. Again, I'll apply my I-fund rule of thumb - don't use the I-fund for short plays.

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[Griffin]

My stream of concious continues.....

Bernake says inflationary pressures are still a concern, the market sinks - that a no brainer.

Bernakes says inflationary pressure are moderating or even improving - does the market rally despite the not so hot earnings reports?.....I think the recent stabilzation is short lived, as the market pauses for Bernake - regardless of what he says the selling resumes after chow.

(Bernake speech begins at 1:00 pm EST)

 

[ATCJeff]

My stream of concious continues.....

Bernake says inflationary pressures are still a concern, the market sinks - that a no brainer.

Bernakes says inflationary pressure are moderating or even improving - does the market rally despite the not so hot earnings reports?.....I think the recent stabilzation is short lived, as the market pauses for Bernake - regardless of what he says the selling resumes after chow.

(Bernake speech begins at 1:00 pm EST)

Nice call! Great Job

 

[Birchtree]

Yes, I'm sure I gave back everything I made last week. But Scarlet, tomorrow is another day.

 

[Griffin]

Yes, I'm sure I gave back everything I made last week. But Scarlet, tomorrow is another day.

Yes tommorrow is another day, and you will likely give back everything you made the week before last too.:cheesy:

Personally, I think tomorrow is a great day to dollar cost average back in (oh wait.....thats the wrong term when you move the whole kit and kaboodle because you didn't loose anything).....whats a good term for what I am doing......oh yeah.....timing .

 

[weatherweenie]

whats a good term for what I am doing......oh yeah.....timing .

Gambling is a good term. :cheesy:

 

[Griffin]

Paladin,

I appreciate the thoughts and comments. I agree that Friday is the more likely day for the rally, because the longer history tells us the market usually takes a day to find support. The OSMs have now moved to the bottom of the recent channels and it looks like the USM will follow suite. On the other hand, the recent history has drifted more towards quick turn arounds. Since today will take out most of the distance to the bottom of the channel, I think I am going to make my IFT today, the little red I may pick tomorrow is worth the risk that the market decides to use some ridiculous piece of news, like tomorrow's 2:00 pm treasury report, to spur a late day rally.

 

[Griffin]

Gambling is a good term. :cheesy:

It's only gambling if you walk away from the table....otherwise it's risk management! :nuts: