MrBowl's Account Talk

[MrBowl]

Moving Funds to 100% G COB today. The market looks toppy and it seems the rally since Election Day seems to have lost steam. Big changes like today bring uncertainty. It's guaranteed that some policy surprises will come along soon. Some could shoot the market upward, however, but I'll just step aside because I think a 5% drop looks more likely than a 5% rise at this point.

 

[MrBowl]

I spent some time back in the S fund in Feb and ended up with a fairly nice month, especially compared to my mediocre past 2 years. I thought I was wise to move out on the 15th. Was yday the day to start a down turn or was it a great buying opportunity? Seems like the market likes last nights speech. I decided to jump back in based on Steve Grasso's tweets. I don't like buying on 1% up days, but he's got such a good track record that its wise to strongly consider his advice. He rarely tweets, which tends to add a little more weight to his comments. He basically said that yday's down action was a buying opportunity and market can rise until specific details of new policies are laid out. In other words, until the required pain of the proposed policies is known we should see gains.

 

[MrBowl]

Two problems with that move on 3/1:
1) It was wrong. Grasso is good but he was wrong that day. Its been a struggle for 7 weeks. You always have to weigh your options every day, and I remained patient.
2) It was a day too late. The move would've looked a lot better if it included the nice up move on 3/1. Timing is everything.

The S fund has had a good week. I would've remained in, but the nice surge in the past couple of hours has me running to the sideline to take a breather (mostly). Going with 75% G 25% S for now.

 

[FireWeatherMet]

Great minds think alike (lol).

I'm stepping aside today also...similar reasons.

So of course, that means the C and S will probably go on a 5% upswing.

 

[MrBowl]

I think we look at the same triggers, right or wrong, because there were other times I made moves and saw that you did, too.

One other thing I think may come into play is that tomorrow is an expiration Friday. The market usually seeks some sort of equilibrium and today's big leap seems like the kind of thing that gets reversed the next day. The S fund has had a much better week than the C fund. So short-term, over just a few days, I think the S fund has some down side. Longer-term, next few weeks, I just don't know. The market has done a good job of ignoring mediocre economic news. Don't know how long that will last.

Great minds think alike (lol).

I'm stepping aside today also...similar reasons.

So of course, that means the C and S will probably go on a 5% upswing.

 

[FireWeatherMet]

I think we look at the same triggers, right or wrong, because there were other times I made moves and saw that you did, too.

One of our mutual "triggers" (lol)

 

[nasa1974]

I wonder how the French elections will affect the "I" fund?

 

[MrBowl]

Seems like nothing affects this market for very long. I have a friend that is always trying to go short, mostly based on economic news that he interprets as "doom and gloom". If he had any hair left he'd be pulling it out almost daily.

I left 25% in the S fund because I just wasn't sure. It puts me at ease that I'm not completely missing out as it rises. If it starts a significant decline I won't be hurt much, but I can jump more fully in then.

 

[MrBowl]

Look on the bright side...those with trading strategies may actually get to use them in the upcoming days/weeks and perhaps months.

 

[MrBowl]

[FONT=&quot]Bond yields and mortgage rates are higher but I don't think they are in a problem area. Compared to the long run rates are still low. If I was trying to buy a house now i wouldn't cancel my search. [/FONT]
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[FONT=&quot]Three things happened to cause this dip. [/FONT]
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[FONT=&quot]1) the market ran up so long that we were due for a 3-5% dip any time. [/FONT]
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[FONT=&quot]2) jobs report showed higher wages which caused inflation fears which meant the the dip will happen now (week of Jan 29). [/FONT]
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[FONT=&quot]3) so many hot shots, hedge funds, and naive rookie day traders with a lot more money than experience were over leveraged in the VIX, XIV, and related products that when stocks were lower and the vix was higher on Monday Feb 5 they had to start selling. That made their products even less valuable and they got margin calls, so they had to sell everything they had, from triple strength Inverse VIX to 3M, just to pay the margin. This situation turned it from a 3-5% dip to a 10-12% dip. [/FONT]
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[FONT=&quot]In the final 2 hours of trading Friday those products began to settle down and the market rocketed upward. The margin calls seemed to have stopped at that point. I expect there will be new tests and bursts of margin calls and selling Monday and maybe Tuesday, but we are quickly running out of those people.[/FONT]
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[FONT=&quot]Look at the economy...increased corporate bonuses instead of layoffs, lower taxes (which I see for the first time in my upcoming Tuesday paycheck), very low unemployment, good GDP, etc. A market dip during times like this is quickly forgotten. We'll see new all time highs by May, maybe earlier.[/FONT]

 

[pmaloney]

Nice points and good analysis! :smile:

 

[MrBowl]

My rule had been that there needed to be two consecutive up closes to establish the dead cat bounce/relief rally/sucker's rally/whatever you want to call it. When I looked at the situation closely last Friday and over the weekend it occurred to me that the uptrend last Tue-Wed satisfied all requirements except for that arbitrary rule of mine. When tossing that rule out I gained more confidence that the sharp turn around midday Friday was the real deal and we are on the far side of the canyon. Dips like this used to happen 1-3 times per year, and we usually see very few down days in the weeks following the dip. I think that's where we are now.

It's helpful to step back and set aside biases to get a clear view of what really just happened and what comes next. I don't think that inflation is high enough to matter yet, even though the direction is worth closely monitoring. The VIX issued seems to be taken care of for now. It looks to me like we will resume market trends that were in place back in mid Jan, but perhaps with a bit more volatility since folks will be justifiably more skittish.

Trade the market you got, not the one you want!