Griffin Account Talk

[clester]

Griffin, Since you're so good on charts. Does the current stochastics show ovewrsold yet? I use bigchart and it shows the fast stochastic at 20, but others say we aren't oversold yet. What's your opinion.
Thanks

 

[Griffin]

Don't go making up stories about me......:notrust:, I haven't cracked the real time over sold/bought indicator. Tom talks about our conditions enough that I haven't bothered.

Griffin, Since you're so good on charts. Does the current stochastics show ovewrsold yet? I use bigchart and it shows the fast stochastic at 20, but others say we aren't oversold yet. What's your opinion.
Thanks

 

[Griffin]

Folks,

Here's where you can get your hands on the Beige Book at 2:00 PM EST.

http://federalreserve.gov/fomc/beigebook/2007/default.htm

I'm not sure what the market thinks it's going to see in there, but it seems to be waiting for it. I can't imagine that it is going to show any kind of significant expansion. Given the selling pressure so far, I'm inclined to believe, that no news is bad news.

 

[Griffin]

We get new homes sales at 10:00 am EST. Looking at Tom's chart and assuming that the situation deteriorates further, then a step down to 1475 on the S&P is 2.8%. That would be one hell of a down day for the market - that is, if we were going to cover that distance in a day. The next major support line is at 1450, which is a full 4.5% below where we are currently at. Either one of those would constitute a healthy correction. I would not be suprised if we hit 1475, rallied for two or three days then made a second push down to 1450.

So, do we bank on covering 2.8% today (or some more intermediate level of support) to play off of the oversold situation. The answer lies in the housing report. If it's really bad, today may be my buying opportunity.

On the other hand, I have walked away from every significant correction telling myself to "let the dust settle", before buying back in. It's easy to get suckered into each leg because we all know the biggest day of any rebound is the first day, and it's always going to look like it's finding a bottom, except for those brief moments where it's moving quick. Keep your wits about you - now is not the time for hasty judgements.

 

[Show-me]

OK what just happened to the futures and OSM. I'm starting to worry.

 

[Warrenlm]

121 point drop in futures at this hour on the DJIA. Yesterday another pay service moved into G. I guess those people still in stocks now have to tell themselves we own shares and the share price will eventually come back up and ignore the dollars for now. I thought yesterday at 1015 you were premature, Griffin, but it sure looks like you read it right then.

 

[Show-me]

Yep, good job Griffin!

 

[ATCJeff]

121 point drop in futures at this hour on the DJIA. Yesterday another pay service moved into G. I guess those people still in stocks now have to tell themselves we own shares and the share price will eventually come back up and ignore the dollars for now. I thought yesterday at 1015 you were premature, Griffin, but it sure looks like you read it right then.

I thought the same thing around 11ish. Though I did move into defensive mode. 50G and 50C. I try to keep atleast 50% in the stock funds til things break down completely. Today may be the day to run for safety til this shakes out.

 

[Griffin]

Eating the loss is hard, but if the only reason your staying in is because of yesterday's decision.....been down that road enough.

I thought the same thing around 11ish. Though I did move into defensive mode. 50G and 50C. I try to keep atleast 50% in the stock funds til things break down completely. Today may be the day to run for safety til this shakes out.

 

[ATCJeff]

Eating the loss is hard, but if the only reason your staying in is because of yesterday's decision.....been down that road enough.

I still like the overall market outlook down the road. The hard part is trying to figure if this is more than just a 3-5% dip.

 

[Griffin]

Jim Cramer is calling this market anemic...but I see it as sustainable. 10% a year out of the S&P 500 is perfect. I certainly see a relatively quick rebound, once we get an idea of how bad this "subprime and prime" debacle is going to extend.... probably within a month or two. I would have bought back in today but I was away from a computer. I will probably move back in tomorrow to play the first bounce.

I still like the overall market outlook down the road. The hard part is trying to figure if this is more than just a 3-5% dip.

 

[Griffin]

I don't know if it's greed or the thrill of the kill that I'm feeling, but I'm ging to slip back into stocks today. I know I'll get spanked for this audacity......but I just can't wait for the dust to settle. I will use some caution and go with the C-fund.....

I may be away from the computer for the rest of the day....so if this looks like a dumb move as the day progresses and your wondering why I don't change it....now you know.

 

[FogSailing]

Thanks for posting Griffin:

I was beginning to think that only Nnuts and I were getting our butts kicked...Unfortunately, I was wrong again....

FS

 

[Griffin]

As I mentioned yesterday, I am slipping back into stocks in the C-fund, looking for a bounce. I expect a retest of todays lows within the near future, so my trip into stocks will be short.

But that is not what this post is about.

The Subprime problem is now the Prime problem......be sure you understand this as we go forward. Financials have been on a huge tear for years and the could very will give back some substantial gains. Which means we could go lower - the next step down is to DRUMROLL PLEASE..........around 1320 - that's no joke. A full 9% from where we are now.

If your thinking about doing the Ducati thing....It could be the better part of a year before that cycle brings you back to where we are today.....and that assumes the dip into that valley doesn't reverse the bull trend.

Do not underestimate what happened to Countrywide - the same thing may very well be happening to every other major lender. Foreclosure's and housing price drops may become the name of the game for two years - that could mean a two year bear market - or one very large correction upfront.

I'm not doomin and gloomin here, but I want to go on the record as having put this out there.

View attachment 1803

 

[merlin]

Thanks for posting Griffin:

I was beginning to think that only Nnuts and I were getting our butts kicked...Unfortunately, I was wrong again....

FS

I feel as if Missouri Mule has kick in the back.

 

[ATCJeff]

As I mentioned yesterday, I am slipping back into stocks in the C-fund, looking for a bounce. I expect a retest of todays lows within the near future, so my trip into stocks will be short.

But that is not what this post is about.

The Subprime problem is now the Prime problem......be sure you understand this as we go forward. Financials have been on a huge tear for years and the could very will give back some substantial gains. Which means we could go lower - the next step down is to DRUMROLL PLEASE..........around 1320 - that's no joke. A full 9% from where we are now.

If your thinking about doing the Ducati thing....It could be the better part of a year before that cycle brings you back to where we are today.....and that assumes the dip into that valley doesn't reverse the bull trend.

Do not underestimate what happened to Countrywide - the same thing may very well be happening to every other major lender. Foreclosure's and housing price drops may become the name of the game for two years - that could mean a two year bear market - or one very large correction upfront.

I'm not doomin and gloomin here, but I want to go on the record as having put this out there.

I agree. If we bounce Monday, I run for safety with atleast 50%.

Jeff

 

[Birchtree]

Prime is still not a problem for the market primarily because the small individual investor is not in this market. This week's action has been all hedge funds locking profits with a strong desire to make buy backs at lower pricing. The up kick could be down right explosive. Companies are buying at cheaper prices, the euro zone ladds are buying, and the Chinese may be here already just waiting. Watch the BIG V. 100 more points down on the open to set the panic and then run like the road runner back to the top of the well.

 

[Griffin]

There is absolutely no way you can justify this statement - more then just the financial sectior is hanging in the balance. For every foreclosure there a probably 10, 20 or more home owners struggling to make their payment. The evidence is mounting that the Prime problem is national which means it's more then just increased energy costs, or local taxes, or new hurricane/flood insurance issues, or bad lending practices. This problem is ubiquitous to almost every housing market which means American's are way overextended. While these folks may not be investor's in the stock market. They represent a massive liability the financial sector may not actually have been able to underwrite, and with a rapidly declining housing market, the collateral itself is insufficient. That only leaves the Fed to bail out the sector and were talking about a bill that makes the airline bailout look like peanuts. While we don't fully know how far this problem extends, the fact that it may exist is a problem in and of itself.

You are the only person on the tracker, who's trading style can operate under the assumption that this market is going to recovery like it did in February. February's recovery was the exception (straight up - no retest) not the norm. Everybody else has the potential to benefit or redouble their losses from what happens next.

Prime is still not a problem for the market........

 

[Birchtree]

The harder the market falls the harder the next rally runs. Let's hope as July comes to a close, that fewer traders fear that hedge funds will start selling to meet possible margin calls from lenders or redemption requests from their investors. The Dow CLX climax numbers are at the 1987 extreme lows of -28. In the last 10 plus years the last two trading of the past week are the first instance where the Dow components had zero positive CLX values and 25 or more negative CLX values for two or more consecutive days. The bottom line from an historical perspective is that this is a bullish sign over the next few weeks at a minimum - watch out for more Hindenberg Omens though.

The Dow was off 4.2% on the week, its biggest one-week percentage decline since the week ended March 28, 2003. Don't you admire this volatility? Stocks in the S&P 500 are trading at a price earnings over the next 12 months of around 15.5 times expected earnings. These are valuations that are too compelling for buyers like myself to stay away from for long. We've never had a bear market start from the current level of valuation. I may get wet at the bottom of the well but the water will at least be cool. I like large caps because the largest 25 companies in the S&P 500 stock index were recently trading at their lowest price relative to earnings in 20 years. Let it rip - BWDIK just in case.

 

[FundSurfer]

Which means we could go lower - the next step down is to DRUMROLL PLEASE..........around 1320 - that's no joke. A full 9% from where we are now.

If we go below the 200 MDA then yes it looks really ugly.