Market Talk / Dec. 25 - 31

[Rod]

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Mike wrote:

A big red flag went up for me today - the yield curve briefly inverted (and then ended flat). Any time you see a flat to inverted yield curve, banks won't fare too well - they borrow money at the short term rates and lend it at the long term ones - the closer these rates are to each other, the worse it is for them. Another more significant issue here is that when the yield curve inverts, a recession is sure to follow. The last time we had an inverted yield curve was 2000 - a few months before the recession.

Of course, anything is possible, and the rule could have an exception or two - but I'm not betting on that.

I hope to see some strength in the short term so I can begin taking up a much more defensive posture as we head into '06.

Yeah, here's an article on that:

http://www.foxnews.com/story/0,2933,179835,00.html

God Bless:^

 

[mlk_man]

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Has anyone considered that with a flat to inverted yield curve, the Fed will pretty much have to stop raising rates in order for the long term yields to "catch up" with the short term yields? Or am I missing something? I believe this year started with yields pretty much flat, I believe I had a little "discussion"with someone about this. :shock: I don't really see it as a big factor, yet...............................Ever notice how the analysts always have an excuse? Be it oil, yield inversion, yada, yada, yada.. How about just the nature of the beast? S & P was right at resistance again with a lot of big money on vacation. What do youthink the market would do? With no big money to help it through resistance,, I'd expect a pull back? We are now back at support. :^

M_M

 

[learning]

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Well that hurt! :shock: Last year when we had the sell off, it was the day the fed first released their minutes a month after they had their meeting. I do not know if that had anything to do with it or not. However, I am looking for a good day to get out. Now, I will watch and see what happens when they release their minutes this time. I expect that it will be positive for an end to interest rates. This may help me to decide in the future what to do if I believe the minutes will be niceto us. If they are and stocks go up I will be more prone to bet on them. However, I need to preserve some capital at this point in my life. I will not bet that the minutes will have such a huge impact, this time. Next time... hmm.



Take care it’s your retirement.

 

[The_Technician]

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I did a little morning review of yesterdays action and I've got reason to believe that there will be no reprieve before EOY......meaning I believe we're on the way down from now on till maybe end of Jan......question is how low.....1168 on S&P500???? 490's on the Wilshire???? 51 on the EAFE???

Let's see what happens the rest of the week......

Birch, you rich.....

:dude:

 

[The_Technician]

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Also.....As a matter of next years market direction, of which I have been speculating a demise....I recently did an analysis based on the "Golden Rule", Fibronacci, as well as the Elliott Wave theories........the analysis indicated we are at the end of a cyclic rise with a recent history of shortening of cycles and narrowing returns........we should be expecting some sort of change .......seeing all that is becoming of our recent economics this would indicate a reduction in the market.....in other words....a recession is expected....:^

As far as a recent news item which also supports the above analysis.....I also see this morning that the number of home mortgage applications have hit a 3.5 year low..:?...without the sale of homes, there will be alot of industries suffering by a lack of product demand, combine this with a lack of car sales and such ....we're have to be correcting this coming year....combine this with the recent extreme rise in commodities it is obvious what is expected to come our way.....I'm leary of any news that says that we may not get any recession.....:shock:

I have done some other analysis on the typical market in this situation and its very very rare for the TSP to make any percentages for the first couple of months if it does it is really short term......and its usually 6 months before anything really of any substance will show up as far as returns go.......so I'm not going get so hyped up when the funds start dropping......they are going to drop and it would be smart to wait it out till a support level has shown up....:i...I have some expected low numbers for the Funds and will publish them at a later date.....

Hope this is informative and supportive to your decisions this year.....

:dude:

 

[Mike]

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Yes, the yield curve will normalize. However, this probably won't happen until the economy has already slowed down and the bond traders expect renewed growth / inflationary pressures and turn their attention back to the short term securities.

In the meantime, expect a recession at some point and the associated market weakness. Raise cash, buy up the short term bonds, and start taking up defensive positions.

 

[The_Technician]

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In the last same scenario in 2000 with a yield curve inversion the C, S, I funds lost substantially.....-10 to -20% weren't unusual.....till 2003....The F fund did do very well returning 8-11% I believe.....with few losses per month.....I have been looking for a good entry into the F fund myself but under the given pretenses with the new year coming it may just be prudent to just jump in at anytime.....

:dude:

 

[vectorman]

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Thanks for the info Tech......

 

[Show-me]

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The Technician wrote:

In the last same scenario in 2000 with a yield curve inversion the C, S, I funds lost substantially.....-10 to -20% weren't unusual.....till 2003....The F fund did do very well returning 8-11% I believe.....with few losses per month.....I have been looking for a good entry into the F fund myself but under the given pretenses with the new year coming it may just be prudent to just jump in at anytime.....

:dude:

Save a spot on that boat for me!

I looked back at the TSP in another thread and came up with the same result.

"Since 1988 the C fund always outperforms the F unless the C finishes in the negative.

Since 1995 when the C and S funds both had a negative year the I fund followed with a negative year.

Since 1995 the I fund has had only one year that has outperformed both C and S funds, 2004. I don’t count this year….yet."

Wished I'd stayed where I was.........I fund. Stupid, Stupid, Stupid! Try'd to gamble and got spanked. Stupid, Stupid, Stupid! I saw all the charts, Spaf emphasized them numerous times. The only chart looking good right now is I Fund and it almost crossed over on the MACD.

What to do, what to do?

 

[bkrownd]

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The Technician wrote:

I did a little morning review of yesterdays action and I've got reason to believe that there will be no reprieve before EOY......meaning I believe we're on the way down from now on till maybe end of Jan......question is how low.....1168 on S&P500???? 490's on the Wilshire???? 51 on the EAFE?

Lets hope for a big January pullback. I'm finally going to be able to pump a lot of money into TSP this year, and it would be a shame if I end up with a loss on my big investment because share prices were too high this winter/spring.

 

[bkrownd]

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Please somebody release some bad economic data fast to stop this accursed rally! Arrrrgh! :s:s:s

 

[cowboy]

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bkrownd wrote:

Please somebody release some bad economic data fast to stop this accursed rally! Arrrrgh! :s:s:s

What?????? Why would anyone want that at the moment. If you just got in today most likely there may be more gains coming. We're in a nice rally lets flow with it! Besides Cowboy needs new boots!!

 

[bkrownd]

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cowboy wrote:

What?????? Why would anyone want that at the moment.

Because I'm buying extra C and S today and I want it to be cheap, naturally. I missed the deadline yesterday.

 

[cowboy]

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bkrownd wrote:

cowboy wrote:

What?????? Why would anyone want that at the moment.

Because I'm buying extra C and S today and I want it to be cheap, naturally. I missed the deadline yesterday.

Buying cheap doesn't necessarily mean a gain. Although nice it doesn't mean anything unless it rally's up for you in the future. You really don't want the rally to end as now that you purchased you want to gain, I would think. The key is to quit kicking oneself for the past misses and look ahead and try to beat a benchmark of some type. All goals should be somewhat reachable, not 30% or something outlandish that may not be obtained. We can all look in the past and say we should have done something we didn't. It's kind of like buying the wife orgirl friendsomething exotic for Christmas, you never know what the response or effectwill be!! LOL! Whoops maybe should have left that out!

 

[bkrownd]

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cowboy wrote:

Buying cheap doesn't necessarily mean a gain. Although nice it doesn't mean anything unless it rally's up for you in the future.

The cheaper I buy, the more I gain. Why would I want to pay more for the same shares? I want some bargains this winter! Fortunately it lost some steam at the end of the day. If I had made the (7AM) deadline yesterday I would have got the cheaper price and the G penny as well. Dang.

 

[cowboy]

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bkrownd wrote:

cowboy wrote:

Buying cheap doesn't necessarily mean a gain. Although nice it doesn't mean anything unless it rally's up for you in the future.

The cheaper I buy, the more I gain. Why would I want to pay more for the same shares? I want some bargains this winter! Fortunately it lost some steam at the end of the day. If I had made the (7AM) deadline yesterday I would have got the cheaper price and the G penny as well. Dang.

The cheaper I buy, the more I gain. Not to burst your bubble but that is false in stocks. You could of bought cheaper today and still lose tomorrow. Like I said don't kick yourself for missing a move and always look at tomorrow not the past as you will lose if you don't. What will you do if the market goes down tomorrow?

 

[bkrownd]

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cowboy wrote

The cheaper I buy, the more I gain. Not to burst your bubble but that is false in stocks. You could of bought cheaper today and still lose tomorrow. Like I said don't kick yourself for missing a move and always look at tomorrow not the past as you will lose if you don't. What will you do if the market goes down tomorrow?

What will I do if the market goes down tomorrow? Perhaps I'll buy some more! Then I will celebrate good prices, of course. You seem to be suggesting that somehow I'll be forced to sell tomorrow at a loss? Huh? I'm holding these shares until at least the year 2040. I'll buy them cheap whenever I can, and be glad for the opportunity.

 

[cowboy]

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My thought is if your cost averaging in until 2040 then the fact that u are investing will make you more money then the cost of what you pay for the stocks. I guess if stocks go down if you do have more to buy you would be cost averaging in to the fund wouldn't you. You don't mention what your doing or how much your investing. To jump on the end of the Santa rally and say you want the stock price to go down and your buying may be setting you up for a big loss in the short term. I am not saying you will sell for a loss, what I am saying is that buying cheap doesn't mean you will profit. What is cheap by the way? Cheap, is relative word,in what the buyer feels is cheap. Think about this. Then come back to this post the end of January and see if you bought cheap, only time tells all. What if I tell you, you bought high not cheap? Am I wrong or are you right? If I was holding the shares to 2040 would I buy on the Santa Rally?I am not trying to tick you off in any way but I am trying to learn why buying today would be cheap. Especially when I seen the peak about two weeks ago and now were trending down it seems, andsome on this board are saying were going to see a drop in January anywhere from 5 to 10 percent.

 

[bkrownd]

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Look, this is very simple. I re-allocated some G to C & S today. (Today, as in NOT tomorrow, next week, or next month.) Why would I want the price of C & S to increase this afternoon so that I would get less shares for my money? Obviously not! I want to get the MOST shares my $$$ can buy. That means I wanted low share prices at COB this afternoon. (and any other day I'm buying shares, for that matter) That is all.

 

[Spaf]

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The Kingdom of TSP

Daily Edition

Yak, Doodles, Tea Leaves, and Fortunes. Date: Dec. 28, 2005


Kingdom Yak.

Market Yak......Vestor sentiment improving with better data and a rise in consumer confidence.

Other Yak........Lube rises on projected OPEC cuts.


Doodles, and Tea Leaves.

Doodles:
S&P 500 ($SPX)
Closed at............... 1258.17, up +1.63
Money flow............ -0.149, up.

Stops..................... Alert: 1261 [broken], Trailing: 1249.

Averages............... +5.49, dn. Possible downtrend.
Overbought/sold..... [70] 51.6 [30]

Light Crude (NYM)
Closed at................ 59.82, up +1.66
Markers:................ <60 = ok, 60-64 = worry, >64 = critical.

Tea leaves:........................ Red.


Fortunes.

Position.............................. 100G