Market Talk

Spaf

Honorary Hall of Fame Member
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The Kingdom of TSP

Sunday-Weekly

Early Edition


Market News, Doodles, Tea Leaves, & Yak Date: August 7, 2005


Market News.

Kingdom Talk: Market bucket dropped! When vestor dropped the bucket it landed on a oil spike; putting a hole in the bucket. Some vestors were using duct tape to repair the hole. Will the duct tape work or will the leak continue?

Elsewhere: Bits and pieces from briefing.com: The strength for July was consistent with strength seen across other economic data. Retail sales, business orders, and industrial production have been very strong in recent months. The data should be taken at face value as another indicator that economic trends are picking up.
Average hourly earnings were up 0.4% in July after a gains of 0.2% in each of May and June. This trend reflects a modest pickup in wage growth but nothing that reflects significant inflationary pressures. The economic numbers are strong across the board. Real GDP trends remain above long-term growth.

The Fed policy makers (FOMC) meet Tuesday amid expectation for a 25 bp hike in overnight policy rates.

August is always a tough month for the market. However, the economic and earnings trends remain extremely favorable.

Other News: -> http://www.briefing.com/SilverIndex.htm

-> http://www.bullandbearwise.com/


Doodles, and Tea Leaves - Weekly.

Doodles:
S&P 500 (Index)
Closed at 1226.42, dn -7.76 for the week.
CMF (money flow) at 0.095, dn -0.093
RSI (strength) at 50.6, dn -8.4
MACD (trend) changed bearish
Slow STO (signal) changed bearish
ROC (change) fell to minus area

Light Crude (NYM)
Closed at 62.31

Attachment: S&P (3mo) chart ending 08-05. Added: 20dMA.PSAR, Slow STO , and ROC.


Tea leaves: Yellow - Red: Fed rate meeting near. Oil in critical range. Market swimming in worries.


Yak.

Remarks: Holding 74/26
My sentiment: Neutral
S&P Stops: Alert: 1233 *broken*, Trailing: 1221
Oil Markers: <57= ok, 57-62=worry, >62=critical
Weekly TSP Returns: LI=-.02, G=+.01, F=-.05, C=-.08, S=-.25, I=+.11
 
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With adjustable rates poised for a hike.

Consumers maxed out, and not many places left to borrow from.

Housing starts are poised for a slow down and when that happens all sectors will feel a pinch to include labor.

Oil remains high.

Individual saving accounts are at an all time historic low.

Highs were reached in almost all indexes.

I keep hearing the pundits declaring that the economy is great and moving upward.

Unless Indians are using the contracting out dollars to stimulate the US economy I just don’t see our economy lurching forward for any meaningful length of time.

I went 100% G on 8-1-05 and plan to stay there for a while until this mess all sorts itself out.

Trying to figure this stuff out is like having another full time job.





Hope this didn't double post
 
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Jovarn,

Net exports and business capital spending will start to do more of the heavy lifting for the economy - they are now just starting to contribute.

There is a ton of information to digest just to find out if you are on the correct side of the street - bearish or bullish. Dollar cost averaging helps take out some of the work. Automatic pilot is the way to fly - but the G fund takes the long way around to arrive at any destination.
 
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JOVARN,

You aren't alone! In my area I look around an the only jobs I see advertised are "service sector" jobs. Nursing, CNA, restaurant, truckers, distribution, warehouse, and maintenance. I do see a few manufacturing jobs but most of those are service or white collar. Once every two or three weeks I hear of a new manufacture shutting down or planning to shut down and move off shore. In this region we have many empty retail and manufacturing buildings.

Wal-mart, Lowes, and Home Depot killed all of the small retail and lumber stores. The local mall is hurting. “Dollar Stores” are the only new stores that can seem to make it. Dollar Tree, Dollar General, Family Dollar, Big Lots, ect. have all opened new stores in one town of 50,000. Pier One, Kohl's, and some other retail stores are being built also. Bar’s and bank’s are a dime a dozen. No new “skilled labor job” are moving into this same town of 50,000. Local hospitals have been expanding though.

This fall will be sad for local farmers. We have had two small rain showers this whole summer. Look at a ear of corn in the field 50 feet from my home and it was half the length and had the smallest kernels of corn on it I have ever seen. Fields are already turned brown or in the process. Very, very bad!

I live in a rural are and used propane to heat my home. I now use wood. Those of us that can afford it pre-contract our propane for the winter. Two years ago .95 cent per gallon. This year $1.35 plus per gallon. During peak usage I have seen spot price over $2.00. Poor people don’t stand a chance with those prices. They don't have the money to contract and they can’t afford the price during the winter.

I certainly can not give a professional explanation for what is driving the market but I will try to ride the trend while being cautious. My fear is that all the negative things will catch up with us when we are looking away. My unprofessional opinion is that corporate profits are high because they are lowering labor costs and the masses are spending what they don’t have or won’t have when the realize their jobs are in another country. What until the big three auto makers take away all of the incentives! They are trying to very hard to keep sales up and are using more and more desperate tactics to do so. At some point I think they will have to abandon all of their incentives.

Just a few of the concerns and thoughts floating around in my head. I haven't even touch the surface.

My other worries are U. S. debt, taxes, health care, airline’s, aircraft manufacturing, energy, storm season, consumer debt, social security reform, postal reform, labor unions, corporate corruption, corporations defaulting on retirement payment, CHINA, MEXICO, NAFTA, CAFTA, EU, terrorism, education,...............................................

I’m a sick puppy! Good luck all!
 
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Thank you Spaf, teknobucks, JOVARN, Birchtree, Show-me for your excellent commentary providing perspective on the economy and markets.
U_THIN138.gif
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I concur with WW. Thanks people for an intelligent debate and no sniping. A lot of info to consider. Yes, I am very bullish on the economy for the later part of this year even with only 16 months to retire.

I also practice buying on the dips and dollar cost investing with the TSP and my private portfolio.

Let everyone invest they way they like and there is no need to bash anyone for a particular opinion but read and provide a logical and precise rebuttal. We all will get a lot more out of it.
 
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Show-me,

Here is an idea to help you make extra money. Have you ever considered bootleging those 3 gallon toilets into this country from Canada. The Canadians are letting them flow through with no restrictions. Probably helping their trade deficit with us.

Our economy seems to be moving toward a service economy. Maybe at some point in the near future we will become a tourist mecca for the middle class Chinese that are working our exported jobs. Can you imagine the potential opportunities. Presently they are allowed to go to Hong Kong with no currency limitations - they will want to discover America - and all that is American. Tell your kids to start learning to study Chinese and Russian languages - they will be on their way.

Dennis
 
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The S&P index will have some drops along the way before finishing the year at 1300. I still see a drop to the 1186 support level.

It wasn't that long ago where the S&P average was hovering around it's 200 day moving average; now it is beyond that. There will be volatility, and I suppose that is what dollar cost averaging is all about.

When the S&P index was at its 200 day moving average it told me two things: dollar cost averaging improves returns and when the index breaks out and above that 200 day moving average it is the best time to sell and wait for the inevitable next dip.

I'm not a good micro-manager; Brinker isn't either. If he says there is good sailing ahead for the next few months I will ride out the storms that will come between now and then and dollar cost average.

Still I have a balanced position: 75% equities, 25% fixed income.
 
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JOVARN wrote:
With adjustable rates poised for a hike.

Consumers maxed out, and not many places left to borrow from.

Housing starts are poised for a slow down and when that happens all sectors will feel a pinch to include labor.

Oil remains high.

Individual saving accounts are at an all time historic low.

Highs were reached in almost all indexes.

I keep hearing the pundits declaring that the economy is great and moving upward.

Unless Indians are using the contracting out dollars to stimulate the US economy I just don’t see our economy lurching forward for any meaningful length of time.

I went 100% G on 8-1-05 and plan to stay there for a while until this mess all sorts itself out.

Trying to figure this stuff out is like having another full time job.





Hope this didn't double post
Found this hard to believe. They started a 1 MONTH- MONTH adjustable ARM product. Started three months ago at 1%. They readjusted on Friday to 1.825%. Basically means your mortgage interest just about doubled in three months.

This was for people with really, really bad credit and suspect income. 18% of new mortgages are 1 month adjustable arms. :shock:

:shock:
 
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Show-me wrote:
JOVARN,

You aren't alone! In my area I look around an the only jobs I see advertised are "service sector" jobs. Nursing, CNA, restaurant, truckers, distribution, warehouse, and maintenance. I do see a few manufacturing jobs but most of those are service or white collar. Once every two or three weeks I hear of a new manufacture shutting down or planning to shut down and move off shore. In this region we have many empty retail and manufacturing buildings.

Wal-mart, Lowes, and Home Depot killed all of the small retail and lumber stores. The local mall is hurting. “Dollar Stores” are the only new stores that can seem to make it. Dollar Tree, Dollar General, Family Dollar, Big Lots, ect. have all opened new stores in one town of 50,000. Pier One, Kohl's, and some other retail stores are being built also. Bar’s and bank’s are a dime a dozen. No new “skilled labor job” are moving into this same town of 50,000. Local hospitals have been expanding though.

This fall will be sad for local farmers. We have had two small rain showers this whole summer. Look at a ear of corn in the field 50 feet from my home and it was half the length and had the smallest kernels of corn on it I have ever seen. Fields are already turned brown or in the process. Very, very bad!

I live in a rural are and used propane to heat my home. I now use wood. Those of us that can afford it pre-contract our propane for the winter. Two years ago .95 cent per gallon. This year $1.35 plus per gallon. During peak usage I have seen spot price over $2.00. Poor people don’t stand a chance with those prices. They don't have the money to contract and they can’t afford the price during the winter.

I certainly can not give a professional explanation for what is driving the market but I will try to ride the trend while being cautious. My fear is that all the negative things will catch up with us when we are looking away. My unprofessional opinion is that corporate profits are high because they are lowering labor costs and the masses are spending what they don’t have or won’t have when the realize their jobs are in another country. What until the big three auto makers take away all of the incentives! They are trying to very hard to keep sales up and are using more and more desperate tactics to do so. At some point I think they will have to abandon all of their incentives.

Just a few of the concerns and thoughts floating around in my head. I haven't even touch the surface.

My other worries are U. S. debt, taxes, health care, airline’s, aircraft manufacturing, energy, storm season, consumer debt, social security reform, postal reform, labor unions, corporate corruption, corporations defaulting on retirement payment, CHINA, MEXICO, NAFTA, CAFTA, EU, terrorism, education,...............................................

I’m a sick puppy! Good luck all!
I went to a Dollar Store when I was in the states last - about five months ago. Everything was over a dollar. :shock: I thought I was going to get some bargains.

Funny China is outsourcing jobs to India now for cheap labor. Mexico is also outsourcing to India.

Empires end when they outsource their manufactoring base. Last example - UK. :^
 
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1 month ARM mortgage product. :(

If that is not a sign of a top, what is?
 
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Birchtree wrote:
Show-me,

Here is an idea to help you make extra money. Have you ever considered bootleging those 3 gallon toilets into this country from Canada. The Canadians are letting them flow through with no restrictions. Probably helping their trade deficit with us.

Our economy seems to be moving toward a service economy. Maybe at some point in the near future we will become a tourist mecca for the middle class Chinese that are working our exported jobs. Can you imagine the potential opportunities. Presently they are allowed to go to Hong Kong with no currency limitations - they will want to discover America - and all that is American. Tell your kids to start learning to study Chinese and Russian languages - they will be on their way.

Dennis
LOL!!!! Great minds think alike! Have already been on the look out for the "big boy" toilets at local yard sales and flea markets. I have also had the same thoughts regarding languages. Don't forget Spanish!
 
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I also have concern about the U.S. not being good at saving money. Investing is one thing but saving for the proverbial “rainy day” is another. I have had difficulty expressing this to my son’s. Soooooooo here is what I have came up with:

Savings bond!
Ya, I know some do not like them but here is my thinking.


Much better rate than a savings account. 3.50% fixed for EE bonds and 4.80% adjusted by CPI every 6 months for I bonds.

Can not redeem for 1 year. (Ha! No buying paintball guns every time you get a little money in your account.)

Three month interest penalty if cashed before 5 years. (Better to take the penalty than get 1% or less in a bank savings account.) After 5 years NO penalty. You now have a laddered emergency fund!

Tangible for your kids to touch, see, feel, look at, drool over. It’s not just a number on an account.

Savings bond wizard is also a good learning aid. It allows them to inventory, update and watch the bonds grow.

Interest earnings are exempt from State and local income taxes, but are subject to Federal, State, and local estate, inheritance, gift, and other excise taxes. Interest earnings are subject to Federal income tax. Interest earnings may be excluded from Federal income tax when bonds are used to finance education.

Secure and backed by the government. If you loose them or they get stolen they can be replace. Just keep an inventory of the serial numbers.



I’m sure there are more good reason’s but I will stop now. The point is to get people to save also. The sooner the better. Pay roll deduction is the best thing for this. “Out of sight, out of mind.” If you don’t have it in you grubby little hand you will be less inclined to spend it. Works for me.

Once again I would like to thank everyone especially Tom! Since I have found TSPTalk I have become much more educated and more interested in my financial independence. Not only have I benefited from this my wife, children, friends, and co-workers have too.

Thanks everyone and good luck!
 
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Someone correct me if I am wrong, but a market index that hovers atit 200 day moving average in effect is shorting its investors; in effect dollar cost averaging can be seen on the other side of the equation as the difference between the index's high and the level at which volatility may discount it.

For instance if there were a way to buy at every low and sell at every high there would be no dollar cost averaging.
 
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Quips,

Don't think I completely understand the question so this answer may not help you but it might apply to others.

The big advantage of dollar cost averaging is that it is time based. The more time available the more shares that can be accumulated. Most market index funds have specific betas for volatility. If you have noticed lately the S fund has been more volatile than the C fund. There are reasons for that happening - but for the sake of simplicity let's say it has now bottomed. The longer it goes sideways the more of an opportunity there is to acquire shares at lower prices. Now if it decides to go down some more you are presented with more wonderful opportunity only now you are giving up profit every time you continue to buy. If you realize there will be another day of S fund outperformance and you can withstand the pain - by all means keep on buying and enjoy the pain. In a year you will look back and wish it had stayed down longer because you would be making even more upside gains with more shares.

Anyway, that's how I like to receive my pain - long and drawn out.

Dennis
 
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post-53-1123465204.gif


Nikkie 225 is getting crushed. :D Down over 1% and sinking.
 
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National Foreclosure Rate Jumps 7 Percent, RealtyTrac Reports

RISMEDIA, July 27 – The number of properties entering foreclosure nationwide increased to 67,024 in June compared to 62,432 in May, RealtyTrac reports.

That was the highest number of new foreclosures reported in any one month in 2005, and caused a 7.4-percent increase in the nation's foreclosure rate, with one new foreclosure for every 1,726 households.

"June's increase is not cause for alarm, but it's certainly an indication that foreclosures bear watching," said James J. Saccacio, RealtyTrac chief executive officer. "Tens of thousands of properties continue to fall into foreclosure each month even in a generally strong national real estate market."

The six states with the most new foreclosures -- Texas, Florida, California, Georgia, Ohio and Illinois -- accounted for more than half of the nation's total with 37,249. All of these states except California registered foreclosure rates higher than the national average. The number of new foreclosures in California increased by 19 percent, but its foreclosure rate was less than two-thirds the national average with one new foreclosure for every 2,773 households.

http://rismedia.com/index.php/article/articleview/11084/1/1/


"Well", 67k/month isn't really that many is it?

I mean, 67k/month times 12 months is only 800k/yr, after all, right?

And given that there are fully 1.6M new homes sold/yr right here (at the peak) in America that's only, ...what?..., 50% of the new home volume?

I don't see any cause for concern,.....does anyone else?
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Good luck bully!

--------------------

2000 when tech stocks were down 20% we heard - no cause for concern. :shock:
 
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I bet all these people getting crushed first thing they will do is buy stocks, like birchy says.

These people getting crushed are the same people that got crushed in the tech bubble.

:D From one bubble to the next bubble they go - the uniformed and greedy. :shock::shock::shock:

Repeat after me. I "paper gain profit" is on paper until you take it off the table.

Still 800% short!!!!!!!!!!:^

Now is the time fortunes are made. The pasture door is open - on the short side.

Baaaaaaaa!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[align=left]Unleaded Gas(NYM)(Access)
Sep
183.25
184.40
183.00
184.15a
+0.93
up.gif

8/7/2005
19:54[/align]
I am long a lot of Gas Investment Trust...go baby go. :shock:
 
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