Market Talk / March 4th - 10th

[Spaf]

The Kingdom of TSP
Sunday Weekly
Early Edition
March 04, 2007​

Yak, Le Charts, Doodles, Tea Leaves, The Tin Box & The Tally Can

Kingdom Yak:
Pro-Yak....................................Hopefully, there will be some good economic data to move the market. The Fundamentals remain intact.

Con-Yak...................................The market was looking for an excuse to sell, we could be here a while, till the nervousness passes!

Jester-Yak................................One week greed, the next fear!

Le Charts
[SPX] RSI is oversold (28.89) futher downside does not appear sustainable.

Charts courtesy of www.stockcharts.com​

Doodles:
Stops......................................Alert (-1%).....Trail (-2%)
.....SPX....................................xxxx.............xxxx
.....IJR......................................xxxx.............xxxx
.....EFA.....................................xxxx.............xxxx

Dollar.......................................83.73 -0.31 for the week ending...$USD

Lube (NYMEX) Closed at..............61.64 +0.50 for the week ending...NYMEX
Oil Markers................................<60= ok, 60-65= worry, >65= panic.

Tea Leaves:
Yakndoodles...............................Red/Yellow.

Tin Box.
TSP (week ending)......G=11.81..F=11.33..C=15.40..S=18.94..I=22.06
....(1 week past)........G=11.80..F=11.25..C=16.10..S=19.95..I=23.29
....(2 week past)........G=11.78..F=11.24..C=16.14..S=19.80..I=23.17
....(3 week past)........G=11.77..F=11.18..C=15.94..S=19.55..I=22.78
....(4 week past)........G=11.76..F=11.15..C=16.04..S=19.56..I=22.68

....(end of 2006)........G=11.71..F=11.14..C=15.69..S=18.76..I=22.22

Tally Can.
Top 10 last 12 mo.........................View attachment 1462
.................................................Courtesy of Fundsurfer's Leader Tally Chart

 

[Aspiration]

Hmm...I might have found the answer to my question. Did 1340 come from the 200 day moving average?

 

[tsptalk]

Hmm...I might have found the answer to my question. Did 1340 come from the 200 day moving average?

Possibly. 200-day simple moving average is 1344. Exponential moving average is closer to 1365.

 

[robo]

Re: Market Talk / February 25th - March 3rd

Robo,

Definitely not intended as a criticism, as I have very much appreciated reading this and other insights into how you view the markets, but how did you decide on 1340 as a potential support for the S&P? I see why you chose 1360. It is a pretty clear support from the daily and weekly charts. However, I cannot see why you chose 1340. I would definitely appreciate any insight you can (and are willing) to provide into your decisionmaking process.

Again, not intended as a flame, but rather as an educational enrichment opportunity for myself.

Aspiration,

I can't give you the details of Fibonacci numbers, but many trade by them. Many books and web sites available to you if you want to spend the time on the theory and how to use these numbers trading. However, you could also throw darts, use crystal balls, moving averages, and many other models to try and figure out MR. MARKET. I can say this for sure, one of the TA's I follow uses this theory and performs very well agaisnt the indexes.


Many TA's use different models to try and find support levels and resistance levels. The 1340 is used from Fibonacci numbers calculating retracement patterns. 1340 is a 50% retracement. 50% is the most popular retracement amount used.

QUOTE FROM WEB SITE BELOW:

" Meaning, if on its latest move, a stock went from 50 to 100 and then started backing off, a 50% retracement would bring it to $75 before it turns around and continues its upward march."

Fibtimer and Fibcount use these numbers. I following the moving averages myself, but find it very interesting how these TA's use these numbers.

Read Fibcounts blog daily and you will get a better understanding. (Forecasts for the Dow, Sp500, Nasdaq, Gold and Silver using TD combo, Elliott Wave and Fibonacci concepts.)

I don't use the math, but I do read comments from these Fib number and Elliott Wave TA's. I can't post others because they are paid services.


Current SPX analysis: Support levels at SPX ( 1341 50% retracement ) and then ( 1313 61.8% retracement )


http://daytrading.about.com/cs/charts/a/fibonacci_2.htm

http://fibo-count.blogspot.com/


My opinion is that around 1360 200 DMA should hold. The same numbers you and Tom were pointing out. I have already started scaled buying and will continue. I don't know if 1360 will hold, but I'm a buyer if we hit it. I don't know were the bottom is, but stocks are getting cheaper everyday.

25% long and adding on weakness. However, again I think 1360 will hold. If it doesn't I will not sell until I get a gain. No matter how painful. That's why I have only 25% invested. Those that think they can pick a bottom are just lucky if they do. Most wait to see that the trend is starting back up.
The short-term trend is down for now, the longer-term trend in my opinion is still up. So I'm a scaled buyer during this sell-off. I said scaled buyer!

Good trading/investing.


Again, I don't think we will hit 1340, but that is only an opinion. Heck, we could go lower, but I'm trying to pick the bottom.

I'll let the market tell me when the short-term trend is back up.

Robo

 

[robo]

Some Market comments:


The Fox news ( Bulls and Bears Crew ) are telling folks to short the Markets on Monday. Many are convinced that we are headed for a 10% correction. The CNBC crew all changed from Big Bulls to Big Bears in two days. They did this after they talked many investors into buying at the top. Could so many be wrong ? They are crying and shouting this is it, a 10% correction! What say you? Just the start or almost over?

I'm currently 25% long after Friday's buys. All long positions. A mix of Internationals and small caps. I might feel the pain next week, but plenty of powder left for scaled buying. I have to many sell-signals to add additional positions for now. For those that are long good luck next week. This sell-off is fear driven and could turn quickly. Looking forward to Bob's and Henry's news-letters by Monday for their opinions on the over-all health of the market.

Most of the Timers I follow are out or shorting the Market. Keep in mind I said Timers. Longer-term investment guys are buyers here. We could just as easily rally next week as see more selling.

Two TA's are sticking with a hold on small-caps or S Fund. If support fails they will be forced to issue sells next week. FundSurfer commented on support for small-caps and we could see a bounce here. We are very close to critical support levels and in my opinion they should hold and we will get a bounce. High risk trade and that is why I'm only 25% long. Again, my opinion only.

Good Investing/Trading I lost money in my brokerage accounts last week and positions in the I Fund. I'm holding for now and will not add additional money. Put me back to around 1% YTD. However, plenty of time left and stocks are getting cheaper. What say you Birchtree?

Timing is everything!!!

Spaf,
Could you do a poll to see how many TSPTALK folks think we will get a 10% or greater correction. I haven't seen this many Bears in sometime!

 

[Birchtree]

My plan is to buy all the way down until I hit water - the bottom of the well. Lower priced stocks mean larger percentages on dividend payouts which means more income for retirement. My saving grace will be my DCA and various dividend reinvestments. I've done this so many times it's almost second nature - providing I'm on the right side of the curve. I can always get more cash to buy on the rebound - have to peek inside the Mrs check book for possible additional reserves - she's my local banker you know.

 

[Aspiration]

Robo,

I really appreciate the explanation. I am thinking of doing something similar to your 25%. I am currently 100% G. Thinking about going 20% C if we hit 1365. Another 20% if we hit just above 1340. Another 20% if we hit just above 1325. Another 20% if we hit just above 1290.

If we successfully break 1290, I will be seriously reevaluating my decision to have a presence in the market.:suspicious:

Thanks again for the explanation of the 1340 number!

 

[robo]

Again, I don't think we will hit 1340, but that is only an opinion. Heck, we could go lower, but I'm trying to pick the bottom.

I'll let the market tell me when the short-term trend is back up.

Robo


Should have read ( NOT TRYING TO PICK THE BOTTOM), left out the (NOT).

Only luck if you can pick the bottom. The dart I threw hit 1378.40 and then we rally. Should hit it interday Monday or Tuesday. However, we could sell off again and test the lows after this next rally.

YA RIGHT! I'll check the crystal balls tonight. I wish I knew, all just opinions!!!!
If I did know I would not be posting here and I would be a very rich man.

Avoid Timers that tell you they know for sure and listen and follow long-term advice from folks with good track records.

Robo

 

[robo]

Robo,

I really appreciate the explanation. I am thinking of doing something similar to your 25%. I am currently 100% G. Thinking about going 20% C if we hit 1365. Another 20% if we hit just above 1340. Another 20% if we hit just above 1325. Another 20% if we hit just above 1290.

If we successfully break 1290, I will be seriously reevaluating my decision to have a presence in the market.:suspicious:

Thanks again for the explanation of the 1340 number!

Aspiration,

Think about what you will do if we rally from here. We could head back up Monday and rally to new highs from here. I think scaled buying is the way to go until we get clear buy signals again. Your approach works nicely if you are are Bullish and a longer-term investor. Talk about a sweet way to dollar cost average. However, in my opinion WAY TOO much cash on the sidelines to get to 1290. That would complete a 10% correction so it's possible, but I think we rally before 10% down. I hope Spaf does the poll. I wonder just how Bearish the board is. Many think we will get a 10% correction and that could be why we will not. Anyway, we need to let things settle down some and not bet the farm on short-term trades.

Take Care!

robo

 

[VirginiaBob]

The market could do only a few things in the coming weeks. 1. Go down some more, 2. go up some more, 3. go up then down, or 4. go down and go up.

If you buy your way down, scenario 1 and 4 would benefit you. If scenario 2 or 3 happens, you may get hurt. In scenario 2, you'd only be in the market 20% during an up cycle. In scenario 3, you be 20% in during the up cycle, but more % in during the down cycle.

 

[robo]

The market could do only a few things in the coming weeks. 1. Go down some more, 2. go up some more, 3. go up then down, or 4. go down and go up.

If you buy your way down, scenario 1 and 4 would benefit you. If scenario 2 or 3 happens, you may get hurt. In scenario 2, you'd only be in the market 20% during an up cycle. In scenario 3, you be 20% in during the up cycle, but more % in during the down cycle.

Well said! Now what to do? I'm going to let the Market show me the way and try and catch the next up trend before it gets away from me. I'm Bullish longer-term and Bearish short-term. The Market looks like it will not be so easy this year. Careful if your a Timer or a dipper. I do agree with Birchtree for the long-term investor. Get you shopping list out. Things are on sale and getting cheaper everyday!

 

[Aspiration]

I appreciate the critical analysis, and I agree that if the market takes off on a rally Monday it would really throw off my strategy. I think we will know tonight if we are going to see a real rally tomorrow. Just my novice intuition, but I do not see this downturn ending until the yen stops gaining against the dollar and the Nikkei has an up day. I think that is likely to be the sign that the bears are about to lose some ground.

My novice intuition also says we see a W on this downturn, and, if we do, I am betting that the middle of the W only takes us up 33% of the ground we dropped from the top. I guess my thoughts are that I would rather miss out on the possibility of getting that gain if it is only from here up than take on the risk of a much larger downside - but I am admittedly very risk averse. My hunch is that we will see 1365. I feel there is a good chance we might see 1340. I think there is a low chance we see 1325. I will be surprised if we see 1290. I will be shocked (at a loss for words) if we go below that. To me, if the market goes below 1290, it would be as if someone pulled the floor out from under the market.

 

[robo]

I appreciate the critical analysis, and I agree that if the market takes off on a rally Monday it would really throw off my strategy. I think we will know tonight if we are going to see a real rally tomorrow. Just my novice intuition, but I do not see this downturn ending until the yen stops gaining against the dollar and the Nikkei has an up day. I think that is likely to be the sign that the bears are about to lose some ground.

My novice intuition also says we see a W on this downturn, and, if we do, I am betting that the middle of the W only takes us up 33% of the ground we dropped from the top. I guess my thoughts are that I would rather miss out on the possibility of getting that gain if it is only from here up than take on the risk of a much larger downside - but I am admittedly very risk averse. My hunch is that we will see 1365. I feel there is a good chance we might see 1340. I think there is a low chance we see 1325. I will be surprised if we see 1290. I will be shocked (at a loss for words) if we go below that. To me, if the market goes below 1290, it would be as if someone pulled the floor out from under the market.

Aspiration,

I do agree with your comments. Henry and Bob have served me well with longer-term opinions. Henry comments on China, Japan, and the dollar/yen often. I will get opinions from them tonight or tomorrow and I think they will be buyers not sellers. Around 5% correction so far and Bob likes to add new money in this Bull on Dips of 5% and over. Again, what a sweet way to dollar cost average in this great bull market. I sent you an email check it out. I think in December of 2007 Birchtree will have made a lot of money and all others that have stayed invested since the buy signal in 2003. However, I'm a Timer and a conservative investor. This puts me out of the market more then I'm in.

I have posted before that I invest more like Mike Burk's method for trading. However, I do buy for the long haul in some accounts due to fund limits on transfers. Vanguard only 2 a year and my wife's 401k plan only 5 yearly. Those are the accounts I'm buying for now. I will follow Mike Burk's Method in TSP and Trade in my Brokerage accounts.

http://www.thealphafunds.com/Method.htm

S&P up over 85% since Bob gave that signal

 

[robo]

Sunday, March 04, 2007
S&P Downside Targets


I received a few emails from readers wanting to know how low the S&P can go. First of all forecasting the direction of the market is hard enough, now you want downside targets? OK...I'll give it a shot.

Above is a 10 year monthly chart of the S&P500. Overlayed on the chart are the 15 and 20 month moving averages. Notice how the market tends to gravitate back towards these moving averages. Based on the above chart if the market does continue to pullback here, I would say the S&P will most likely test those levels. As of now the averages are at 1310 and 1336. Keep in mind these averages are rising so next month they will be at higher levels, but as of now that's where I think the market is headed.

http://kevinsmarketblog.blogspot.com/


Kevin has a great blog site. I still think big buyers will come in before we get to 1340 and 1360 should hold. 1360 would be over a 100 point decline and around 7% correction. WOW! Folks waited around for the Big 10% correction in 2006 and it never happened. How about 2007? Is it here and almost over or still to come later this year?

 

[Birchtree]

A V bottom is the contrarian scenario which would be fine by me but not necessarily in my best favor. I have many wall flowers that deserve an opportunity for some dividend reinvestment and the full rotation will take at least 3 months. No stock should be left out and unattended because they each on their own merits produce long term income and capital gains. So as long as I've already paid my dues let's not be in a big hurry to see S&P 500 of 1480. My tugboat account will allow further DCAing under the $16.00 zone which means more shares to my eventual goal. But if a serious short covering rally takes us much higher - I won't stand in the way of progress.

 

[robo]

March 4th, 2007
Market Update: What a Difference a Day Makes
By Dominick


It’s funny how one day can change everything for so many traders and investors. But at TTC we just did what we do every day and, as you’re about to see, the strategy worked quite nicely!

First, we’re still very proud to have ridden the bull market all the way up from last summer’s lows, insisting each week that the ride wasn’t over yet. After reaching the 1360 target on the SPX it was easy to say “done”, but I refused after reviewing literally hundreds of charts. Instead, I took the stance that a stronger, multi-decade Fib matrix target on the NYSE was asserting itself, and would need to be reached.

We got that high in February, only to find that the wave pattern had some finishing touches to put in on the NYSE. Once the pattern was complete, we zoned into the S&P’s last target, along with a number it absolutely couldn’t take out without sparking another huge rally. The target was in a range from 1462 to 1470, as was published in a previous update here, with the absolute “must hold” top number of 1481 reserved for subscribers only.

http://www.tradingthecharts.com/phpBB/viewtopic.php?t=1654

 

[clester]

Unless I'm readin something wrong CNN money has the SP500 futures down 24.75! Japan down 300. Australia down 1%, new zealand down 1%. OUCH

 

[Rod]

Unless I'm readin something wrong CNN money has the SP500 futures down 24.75! Japan down 300. Australia down 1%, new zealand down 1%. OUCH

I'm showing S&P down 5.3.

 

[tsptalk]

Unless I'm readin something wrong CNN money has the SP500 futures down 24.75!

The S&P futures were down 19 on Friday and with today's -5+, it must have added them.

 

[robo]

Down over 400 now in Japan.

http://www.kitco.com/market/

http://www.nni.nikkei.co.jp/CF/FR/MKJ/

http://www.bloomberg.com/markets/stocks/wei.html

Where are the dippers when you need them. Japan is currently on my shopping list. Those traders must have a big time head ache after the last week on the trading floor in Japan!