TSP Signal for 28 July 08
SPX had a relatively flat day Friday. Nothing really worth noting.
Let’s talk oil. The demand for oil has certainly waned or could it possibly be that I was right about a big part of the price being a result of futures speculators. Not long ago many pundits were pounding the desk saying it was a supply/demand issue (they don’t seem to be around much these days). So either demand has eased or I was right, obviously I like to believe it was the latter. Now the question is will it continue. IMO it probably will, but it was not so long ago that $100 a barrel was looked at as a ceiling, it may now be looked at as a floor (at least psychologically). Will falling oil prices help this rally? probably for a short period, but unfortunately I don’t believe even plunging oil prices can pull us out of this bear market. It will help, but there is much more work to be done. Before I go further, I recently read a book on oil and would like to suggest you read it. The book is very relevant to what’s happening in oil today and will likely have you wanting to buy oil after reading it. The book; Hubbert’s Peak, The Impending World Oil Shortage by Kenneth S. Deffeyes.
Before I go on, let me say that I am not a pessimist, optimist, perma-bear, perma-bull or economist. I am a realist and in addition to my propriety signal system I use technical analysis to gauge market behavior and I position my accounts accordingly.
Housing, credit crisis, financials, unemployment etc. IMO these problems are far from over and until they are resolved any attempt to rally will be short lived. In the near term we will likely continue to see the foreclosure rates rise, unemployment rise, banks fail and the FED (although trying hard) not be able to pull us out of this quagmire. The markets will not be able to withstand the onslaught so even as oil prices plunge and they probably will, any rally as a result will likely fail. I’ll come right out and say it, I believe we’re in for a crash and believe it will happen sometime between now and the end of October. Unfortunately, I’m inclined to believe that even after a crash we are in for a severe economic downturn. How do we prepare for such an event if I’m right? It’s hard to say since each individual is in a different situation, but I would remain very attentive to what’s happening in the markets and be ready to step out quickly. Take a look at the G fund and you’ll notice that had you started in it in 2008 and remained in it you would be up by a few % rather than down as all other funds are. This is not a good sign!
If I were in stock funds I would use this rally to bail especially if we move to the SPX 1320 area. In my posts lately I have been saying that I expect the market to reach this or that point based on my analysis. I generally try and refrain from doing that knowing that the more I know, the more I know that I don’t know. Now what in the H e double L is that suppose to mean om? It just means that I know that any time I suggest the market may move to a certain point, it doesn’t have to, it could move opposite to my expectation. The market has a funny way of leading everyone to believe it will do something and then BAM, it does just the opposite.
Yesterday I mentioned that I would be looking at ETFs I like for short and long positions. There are 2 longs and one short I like. I like IYZ at $23 and XLK at $22 for longs and XLU at $38-38.50 for a short. I’ll look again when I get the set up I’m waiting for to enter, but will probably go long SSO based on the SPX movement. I expect the position that I do take to be for a short term.
Regardless of my opinion on market direction, I trade only in the direction of my propriety signal system.
Note: autotracker is wrong by some 2% for my account, 1.34% is a result of starting in January 2008 which is understandable, but the rest? correct YTD performance is below.
Signals:
Stock Funds: Buy signal 17 July 08, entry date 25 July 08 (100% I fund), will get out if SPX begins closing below 1240
Bond Fund: Sell 17 July 08 exit date 18 July 08
Stock fund performance since entry date: C S I
Current positions:
TSP: 100% G Fund
Trading Account: No open positions, waiting for long entry
YTD Performance:
TSP: +7.60%
Trading Account: -3.30%
SPX had a relatively flat day Friday. Nothing really worth noting.
Let’s talk oil. The demand for oil has certainly waned or could it possibly be that I was right about a big part of the price being a result of futures speculators. Not long ago many pundits were pounding the desk saying it was a supply/demand issue (they don’t seem to be around much these days). So either demand has eased or I was right, obviously I like to believe it was the latter. Now the question is will it continue. IMO it probably will, but it was not so long ago that $100 a barrel was looked at as a ceiling, it may now be looked at as a floor (at least psychologically). Will falling oil prices help this rally? probably for a short period, but unfortunately I don’t believe even plunging oil prices can pull us out of this bear market. It will help, but there is much more work to be done. Before I go further, I recently read a book on oil and would like to suggest you read it. The book is very relevant to what’s happening in oil today and will likely have you wanting to buy oil after reading it. The book; Hubbert’s Peak, The Impending World Oil Shortage by Kenneth S. Deffeyes.
Before I go on, let me say that I am not a pessimist, optimist, perma-bear, perma-bull or economist. I am a realist and in addition to my propriety signal system I use technical analysis to gauge market behavior and I position my accounts accordingly.
Housing, credit crisis, financials, unemployment etc. IMO these problems are far from over and until they are resolved any attempt to rally will be short lived. In the near term we will likely continue to see the foreclosure rates rise, unemployment rise, banks fail and the FED (although trying hard) not be able to pull us out of this quagmire. The markets will not be able to withstand the onslaught so even as oil prices plunge and they probably will, any rally as a result will likely fail. I’ll come right out and say it, I believe we’re in for a crash and believe it will happen sometime between now and the end of October. Unfortunately, I’m inclined to believe that even after a crash we are in for a severe economic downturn. How do we prepare for such an event if I’m right? It’s hard to say since each individual is in a different situation, but I would remain very attentive to what’s happening in the markets and be ready to step out quickly. Take a look at the G fund and you’ll notice that had you started in it in 2008 and remained in it you would be up by a few % rather than down as all other funds are. This is not a good sign!
If I were in stock funds I would use this rally to bail especially if we move to the SPX 1320 area. In my posts lately I have been saying that I expect the market to reach this or that point based on my analysis. I generally try and refrain from doing that knowing that the more I know, the more I know that I don’t know. Now what in the H e double L is that suppose to mean om? It just means that I know that any time I suggest the market may move to a certain point, it doesn’t have to, it could move opposite to my expectation. The market has a funny way of leading everyone to believe it will do something and then BAM, it does just the opposite.
Yesterday I mentioned that I would be looking at ETFs I like for short and long positions. There are 2 longs and one short I like. I like IYZ at $23 and XLK at $22 for longs and XLU at $38-38.50 for a short. I’ll look again when I get the set up I’m waiting for to enter, but will probably go long SSO based on the SPX movement. I expect the position that I do take to be for a short term.
Regardless of my opinion on market direction, I trade only in the direction of my propriety signal system.
Note: autotracker is wrong by some 2% for my account, 1.34% is a result of starting in January 2008 which is understandable, but the rest? correct YTD performance is below.
Signals:
Stock Funds: Buy signal 17 July 08, entry date 25 July 08 (100% I fund), will get out if SPX begins closing below 1240
Bond Fund: Sell 17 July 08 exit date 18 July 08
Stock fund performance since entry date: C S I
Current positions:
TSP: 100% G Fund
Trading Account: No open positions, waiting for long entry
YTD Performance:
TSP: +7.60%
Trading Account: -3.30%
