Playing the I fund

[oldschool]

Here's a link I like for its summary info on yen/euro/dollar. Scroll down and it shows major econ releases scheduled for the next 24 hours in the home countries of the major currencies.

http://www.dailyfx.com/story/dailyf.../Even_Strong_US_Data_Fails_1146086103690.html

 

[Master]

Today - 20.12 (+10 cents)

 

[Soldat]

I am almost as bullish on the I fund as Birchboy is on the C. But the fact is that we will have a rate hike. The Euro, Yen, and GBP will most likely brace for impact. That, coupled with an inevitable correction in the European funds, will hurt. Iran has stated that its nuclear plan is "irreversible". That will hurt. Emerging markets are correcting, that hurts. Watch for Fed statements, watch for the dollar to peak right as markets correct. You will know when its time. Birch, better dust off that arc; bring plenty of marine epoxy.

I am playing against the odds on this one, and I am not playing with the I fund for a couple weeks. I will take some profits, I have made almost as much as my entire Y05 already. if you get greedy you get burnt. Oils will feul inflation, F will rebound. And even if it doesnt, it wont fall far. Not like the I fund can fall anyways.

Maybe I am bearish because I am TDY and cant watch the funds anywhere close to as good. Say what you want, Im locking up.

 

[Master]

Soldat,
I agree with you that a correction is coming. However, the fundamentals are that we keep spending more than we produce, and we borrow to make the difference. The trade gap is also getting larger. I think that the I-fund will also be the first one to touch 30/share, and that the gap between C and I will widen over the next couple of years. I already made between my Fidelity and TSP portafolios 2% more than I expected for the entire 2006, but that does not mean that I will play conservative. I will try to time the market and get a few extra cents out of the I-fund, but by the end of the year, the I-fund will remain the highest return fund.
Best,
M

 

[pointman72]

US Dollar Index was -.61% at noon today.

 

[Master]

MSCI has the EAFE index at + 0.439%, that is about 9 more cents.

 

[roguewave]

Soldat,
I agree with you that a correction is coming. However, the fundamentals are that we keep spending more than we produce, and we borrow to make the difference. The trade gap is also getting larger. I think that the I-fund will also be the first one to touch 30/share, and that the gap between C and I will widen over the next couple of years. I already made between my Fidelity and TSP portafolios 2% more than I expected for the entire 2006, but that does not mean that I will play conservative. I will try to time the market and get a few extra cents out of the I-fund, but by the end of the year, the I-fund will remain the highest return fund.
Best,
M

What percentage amount would you apply to support your contention that a "correction" is due compared to a normal pullback away from trend?

 

[Brett]

IMHO, a pullback may be over a period of a week, a correction would be like a 300+ point drop in a day--panic selling. Perhaps someone else has a more technical explanation.

 

[sugarandspice]

Today +.10

 

[Oldcoin]

What percentage amount would you apply to support your contention that a "correction" is due compared to a normal pullback away from trend?

It looks like we’ve had 4 corrections since Dec 23, 05. Each one was preceded by the RSI moving below the 70 upper range line and each pull back was between 2.5% to 3.5%. I also plotted the Share Price for the same dates and I didn’t get the same percentage. The percentage change was very different. I think that if I brought in a $ analysis with a fair value analysis my brain might explode. Naw, I think it might implode. Anyway, currently the RSI appears to have crossed the upper range of 70 downward. However, it doesn’t appear to be a strong move and might just be a head fake. So if you’re not a long term buy and hold keep an eye on things. If you like to buy and hold (ala Birchtree in the C) we may have a nice opportunity to add to our positions and a chance to feel some pain. The trend appears to be still going up.

Of course, the common disclaimer applies….you get what you pay for and this is free!

 

[Griffin]

Anyway, currently the RSI appears to have crossed the upper range of 70 downward. However, it doesn’t appear to be a strong move and might just be a head fake. So if you’re not a long term buy and hold keep an eye on things. If you like to buy and hold (ala Birchtree in the C) we may have a nice opportunity to add to our positions and a chance to feel some pain. The trend appears to be still going up.

Most of the european markets did not get the chance to ride the wave up today during the reversal. Given that all the relevant foreign markets are currently riding the bottom of their respective channels and that the MSCI still came in positive (with a lot of help from the dollar devaluation), The foreign markets may get a start off with a solid bang tommorrow. If the yen and euro don't gain to much strength, Then the I could have a very solid day. The result would be to turn the RSI (the MACD and every other indicator) North leading to a very good week as the foreign currencies move up their channels. With all that said, we will be fighting the strength of the dollar for the next few days so choppy action in the US could lead to huge gains in the I. Should be un, but I will have my hand on the rip cord all the way.

 

[The_Technician]

IMHO, a pullback may be over a period of a week, a correction would be like a 300+ point drop in a day--panic selling. Perhaps someone else has a more technical explanation.

Right at the moment, I'd go for anything that exceeds 3-4% ion the I fund.....don't care about the time period, even though they do tend to last at least a couple of weeks or more..... I would say anything above 2-3% for the C and S funds......at the moment.....

 

[roguewave]

Right at the moment, I'd go for anything that exceeds 3-4% ion the I fund.....don't care about the time period, even though they do tend to last at least a couple of weeks or more..... I would say anything above 2-3% for the C and S funds......at the moment.....

If you don't try and bound your predictions with some sort of well thought out and articulated time frame, then, you're a Mystic. A 3% or 4% down day would not be considered a "correction" as it wouldn't even be considered to be relevent reference a reversal from trend. No, I would consider a correction to have taken place if an => 10% price reduction takes place rather abruptly(a trading session or two) quite possbily signaling a change in trend. Very unlikely given the fundamentals underlying the I Fund. Good luck.

 

[The_Technician]

If you don't try and bound your predictions with some sort of well thought out and articulated time frame, then, you're a Mystic. A 3% or 4% down day would not be considered a "correction" as it wouldn't even be considered to be relevent reference a reversal from trend. No, I would consider a correction to have taken place if an => 10% price reduction takes place rather abruptly(a trading session or two) quite possbily signaling a change in trend. Very unlikely given the fundamentals underlying the I Fund. Good luck.

I believe its all in the window myself....Aug 3rd 2005 for the next week was a correction for a short period...but then again Oct 3rd to the 13th 2005 was also...as well as Aug 3rd to Oct 13th..its all relative to how much and how long of period....but the new trend is set no matter the time period....

I guess what you should ask yourself is what is the expected time period you think will apply......then you can guess how much the correction may be.....

I personally think we're about ready for a 100 day correction.....now what is the correction......> 10%....but thats me ......you may have another viewpoint.....

 

[James48843]

It's a race to the bottom.

Dollar sliding badly once again today against the Euro, and dropping even faster against the Pound.

In Aisa, markets in Japan and Korea dive over 1%.

In Europe, nearly all markets are red today, some significantly red.

But the falling dollar is offseting some of that loss.

If you ask me, it may be a time to switch out of "I" and capture some profit over into "G", and let things wring out a little.

I am thinking of doing that today- but will wait closer to noon before making any decisions. We've had a nice run up in "I", but it may be time for a breather.

 

[Griffin]

Yesterday was harder on the European markets then today, but the slide in the dollar still resulted in a positive move for the I. The dollar is sliding as much today as it did yesterday and the european and japanesse markets are setting up for an nice rally. I do not want to be on the side lines for this, especially with S&P struggling to break away from the 1310 level. Each slide in the dollar has a multiplying effect on foreign gains.

I don't think we are going to get a pullback soon, but rather a reversal later. The next few months may produce the last bit of solid gains to be had until the holiday season. If I have to spend the summer in the G, I want to reach my end of year goals soon.

 

[Soldat]

First off, I will state that I sold out at 19.96 to buy into F fund. So yes, my opinion very well may be biased. I had bought in around 18.60 a couple months back, so I am not too concerned with missing about 2%.

Second, I will note that the Euro has most definitely broken all indications of short term trend and is rising formidably. This is very good for the I fund as it is currently cushioning weak european market conditions. Whether the dollar rebounds or not off of the coming rate hike is anyones guess. I had forecast the dollar to rise in anticipation of that hike. I had not foreseen this break in trend. So what happens next week is up in the air.

What I will tell you is that I am bullish I fund, and have nothing bad to say about it. I have never lost money, long term, in the I fund. I will tell you that we are due a strong correction; when, though, is anyones guess. We could very well rally another 10% before it happens. But I dont see that happening.

What I do see is smart money making large moves out of stocks. I see huge selloffs of European shares. I do see DWCPF down an entire week. I do see European markets correcting and the Nikkei continuing to fall on falling export profit margins. Electronics and Automotives are being hit hard. I do see global RSI falling from an overbought condition.

We all knew it was coming and here it is. Summer. Oil. Iran.

Dont get me wrong, I am still bullish on the I fund. But I will time the markets when profits become tight. I will sit in the F fund because the F fund is fixed above inflation. Right now, inflation has returned near 1% YTD and the F fund is negative. This does mean that we will rebound until the F fund is above that inflation rate. Thats a fact.

Inflation due to oils is most notably referred to as "stagflation", because it does not drive the profits of companies (besides oils) up. It actually drives profits down or neutral. It causes layoffs and downsizing. We are about to lose 4% of the world oil output in another war. How will this effect the global economy? I am very doubtful that it will be a positive thing. Always remember that every strong correction, or panic, is preceded by a massive headfake. I believe that we have already had ours.

Trade safely, because its a slip and slide world.

 

[Master]

MSCI has the I fund at -0.27% This is a loss of about 5 cents. However, we need to see how the dollar behaves for the next couple of hours.

 

[oldschool]

Good article on the dollar - Sweden selling dollars, article suggests bigger Euro central banks may start to follow...

http://news.ft.com/cms/s/2a9dd5ac-d699-11da-b64c-0000779e2340.html

 

[Griffin]

MSCI has the I fund at -0.27% This is a loss of about 5 cents. However, we need to see how the dollar behaves for the next couple of hours.

Master, how did you generate this number?