Market Talk / Jan. 7 - 13

Spaf

Honorary Hall of Fame Member
The Kingdom of TSP
Sunday Weekly
Early Edition
January 07, 2007

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Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Pro-Yak....................................Well maybe a pull back is needed!

Con-Yak...................................Too much resistance, not enough support, and then the data.

Jester-Yak................................A lot of red!

Doodles:
Socks ended down for the week.
Stops......................................Alert (-1%).....Trail (-2%)
.....$SPX..................................1413 broken....1399
.....IJR.....................................66.26 broken....65.56 broken
.....EFA....................................72.60 broken...71.90

Dollar.......................................84.66 up +0.99 for the week...USD Index

Lube (NYM) Closed at..................56.31, dn -4.74 for the week...NYMEX
Oil Markers................................<60= ok, 60-65= worry, >65= panic.

Tea Leaves:
Yakndoodles...............................Red.

Tin Box.
Leaders Tally (Top 10 (7+3)..............5..........0.........1.........3.........1
Leaders Play...............................G-fund, F-fund, C-fund, S-fund, I-fund

TSP (week ending)......G=11.72..F=11.19..C=15.60..S=18.58..I=21.99
....(1 week past)........G=11.71..F=11.14..C=15.69..S=18.76..I=22.22
....(2 week past)........G=11.70..F=11.16..C=15.60..S=18.63..I=22.02
....(3 week Past)........G=11.69..F=11.17..C=15.78..S=18.94..I=22.07
....(4 week past)........G=11.68..F=11.17..C=15.58..S=18.91..I=21.71

Le Charts

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IJR.gif

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Charts courtesy of www.stockcharts.com
 
Last edited:
Spaf,

How many people are included in your Tin Box? If it's 10-15, I would rather see the number of people in each funds. On the other hand, if it's 50+ then I would rather see percentages. Just my personal preference.
 
This applies to me, so I thought I would post it here. I often look over too much data and end up not making a move or trade. Some good thoughts from Kevin. Again, it applies to me. How about you?


Good trading / investing in 2007.
Robo



Saturday, January 06, 2007

Some Thoughts About Trading

I've always felt that the market had a secret code and if I could crack this code I would do well. I figured the holy grail is out there, all I had to do was find it and I would make lots of money. Well let me be the first to admit that I haven't found the holy grail and I suppose I never will. But that's ok because it doesn't exist.

What does exist is the market, the participants in the market and myself. I can't control what the market does but I can control what I do. So doesn't it makes sense to study ourselves as much as we study the market?

I've learned over time that less is more. Less information has actually been more profitable for me than too much information. When we have too much information what happens is it will invite confusion and plant seeds of doubt in our mind which will cause us to not have confidence in what we are doing. I try to keep this very simple. The key is to know what information is important to us and then use that information to make trading decisions. I'm always very clear on what I am doing. I don't mind being wrong about the market, I just don't want to be confused about being wrong if that makes any sense.

Another thing I have learned is that markets are forever changing. What worked well in the past will not work well in the future and what is not working now might one day be a very profitable approach to the market.I really think the ability to change or adjust your trading with the market is what separates an average trader from a super trader. I know guys back in the late 1990's who would buy the open and exit on the close..That worked well when we had a runaway bull market but if you were to try that strategy now it would mostly likely lose alot of money. The reason for this is because the market has changed. I also knew people who played the stockmarket from the long side on Mondays because of the tendency for stocks to rally on Mondays. Well that appraoch doesn't work anymore either. So the market is constantly changing and we must always be aware of this if we are to succeed as a trader.

I also believe that how we manage our money is more important than how we analyze the market. I've seen profitable trading systems lose money because of poor money management. I've seen poor trading systems lose very little money because it was traded by a trader who had excellent money management skills. So money management can make all the difference in the world when it comes to trading performance.

http://kevinsmarketblog.blogspot.com/


The last thing I would like to say is that it's important to become balanced. Every now and then we need to step away from the market, look around and enjoy life. Most people who have a passion for trading tend to spend all their time studying the market and not enough time with their family and friends. Just like the market seeks balance we must seek balance in our lives which means being able to walk away from trading for a few days. This has been one of my biggest problems but I'm working on it!
Posted by Kevin 5 comments
 
Sunday, January 07, 2007

Profit-Taking Negates Surprisingly Good Employment Report
Stocks tumbled on Friday despite a report from the government that 167,000 new jobs were created in December. This was a shock to the bond market, which had factored in a weakening economy based upon recent reports from Monster.com and ADP which showed job losses last month, and bond prices tumbled sharply, raising long term interest rates.

However, the reaction in the stock market was quite unexpected. Stocks tumbled on good news, something that calls into question the whole idea that news drives the markets. The financial journalists hastily went to work, flailing away at various and sundry excuses for stocks to sell off based upon this news. The first law of financial journalism is that news drives the markets, a convenient lie which supports the livelihood of journalists, obviously, but is a gross distortion of reality. In any case, they seemed to settle on the rationalization that a strong economy would forestall interest rate cuts by the Fed under the questionable assumption that the stock market's recent rally had been based upon the idea that this would be the next move by the Fed.

Ignoring inconvenient facts is always a good strategy for journalists, who don't seem to realize that the prospect for future earnings is the overriding factor in determining stock prices, not interest rates, nor even their precious lifeblood, news. In fact, all of the journalists' explanations rang hollow, but that didn't stop the mantra they had settled upon. Basically, they missed the forest for the trees. Sometimes the truth is just too inconvenient to report.

The fact that almost all stock markets around the world fell -- many long before the US Employment Report was released -- apparently didn't factor into journalists' rationalizations. Many world commodity markets tumbled as well.

The decline in markets last week can be attributed to one simple explanation which has nothing to do with news. That explanation is: profit-taking. Investors who had big gains in 2006 were simply selling their big winners. A look at what the major US stock indices did last week and last year shows that the largest losses occured in the big winners in 2006, a sign that this is a normal beginning of year exercise in profit-taking that has no longer term significance:

Stock Index 2006 Performance Last Week's Change
Russell 2000 +16.88% -1.31%
Dow Industrials +16.29% -0.29%
S&P 500 +13.62% -0.60%
NASDAQ-100 +6.76% +1.63%


Clearly, investors with large paper gains last year were anxious to cash in their chips in the biggest winners. Note that the only major index which showed a gain last week was the tech-heavy NASDAQ-100, which substantially lagged the others in 2006.

As Albert Einsten once famously said, "Everything should be made as simple as possible, but no simpler." It's something that financial journalists should keep in mind if they want their product to retain whatever credibility it has left.

http://marketclues.blogspot.com/
 
Is it rally time? Maybe a final rally and then more selling? Maybe more selling and then a rally? Took profits on Friday for a small short postion I had. I now have a small long postion for this week at Friday's close. All short term trades with tight stops. Looking for a better set-up for investment money.

TSP 100% G Fund. Made a 15% 1 day move in the I Fund last week. It was a loser of course! The dollar hurt all of us that played the I Fund last week.


From Mike:

Conclusion

In the coming week the market has a strong, positive seasonal bias.

I expect the major indices to be higher on Friday January 12 than they were on Friday January 5.

http://www.safehaven.com/article-6652.htm
 
Spaf,

How many people are included in your Tin Box? If it's 10-15, I would rather see the number of people in each funds. On the other hand, if it's 50+ then I would rather see percentages. Just my personal preference.

10.
I can try that!
Too few and it's volatile.
Too many and it's slows.
 
08:00 am : S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: -2.0. Early indications suggest stocks may kick off the week in sluggish fashion. Tech bellwether IBM (IBM) has been upgraded, but an analyst downgrade on fellow Dow component Wal-Mart (WMT) is keeping early blue-chip buying interest in check. Oil prices rebounding to the tune of 1.5% and climbing back above $57/bbl following last week's sell-off is also contributing to a cautious underlying tone.
 
Looks like Goldilocks may be back... market budged up.



1:30 pm : The indices remain mired in relatively tight trading ranges, still struggling to find much direction. Fed Vice Chairman Kohn is responding to questions, recently reiterating that the inversion of the yield curve does not mean economic slowdown (it's different this time). Be that as it may, the market has not budged. The
 
Here comes the 2pm tease.
C Fund 1411.49 +1.78 (+0.13%)
S Fund 614.26 +1.38 (+0.23%)
I Fund 72.19 -0.01 (-0.01%)
F Fund 100.09 +0.04 (+0.04%)
 
It's good to see the transports race ahead of the industrials again. The public is waiting for the press to trumpet a Dow Theory buy confirmation so they will feel comfortable in buying and not just buying the top. My seismograph is still picking up hoof vibrations. Lilly padders don't do it. There is too much danger every where you look. Remember, the DJIA experienced an 8% decline from May 10th to mid July'06 and has never looked back. Where is Chicken Little?
 
HOLD
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C Fund 1411.83 +2.12 (+0.15%)
S Fund 614.52 +1.64 (+0.27%)
I Fund 72.38 +0.18 (+0.25%)
F Fund 100.05 +0.00 (+0.00%)
 
Daily Yak

The Kingdom of TSP
Daily Edition
January 8, 2007 Closing

Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Pro-Yak....................................Socks have a PM reversal!

Con-Yak...................................But still range bound.

Jester-Yak................................Still no trend?!

Doodles:
Socks ended up for the day.
Stops.......................................Alert (-1%).....Trail (-2%)
.....$SPX..1412.84......................1413 broken....1399
.....IJR........65.08......................66.26 broken....65.56 broken
.....EFA.......72.30......................72.60 broken....71.90

Dollar.......................................84.61 dn -0.05 for the day.

Lube (NYM) Closed at..................56.09, dn -0.22 for the day.
Oil Markers................................<60= ok, 60-65= worry, >65= panic.

Tea Leaves:
Yakndoodles...............................Yellow.

Tin Box.
Leaders Tally (Top 10 (7+3)..............7..........0.........1.........2.........0
Leaders Play...............................G-fund, F-fund, C-fund, S-fund, I-fund
 
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