3SOF

Jobless claims may be okay but workers are up to their eyeballs in debt and losing out with inflation adjusted stagnant wages. It's the debt burden placed on a consumer driven economy that will stifle growth.

Quote from: capricho on January 24, 2008, 08:17:27 AM
I've already liquidated 80% of my equities during the past few sessions and plan on selling the remainder during the inevitable short-lived bounces that are to come. I do think the odds favor a sharp steep decline overall for 2008. I know it's a losers game to try to time the market but I don't see any advantage in allowing red ink to accumulate with no hedge as is the case with the Main portfolio. Being down 'only' 11% YTD in my portfolio is enough pain for now.

definitely I do not agree with you, Capricho.
You are basing your investing actions and strategies on a lot of blah blah blah....just think about it: people is talking about recession, but do any of them pulled out a number to indicate whioch is the extent of this "recession"? Are we talking of a decline of GDP around 0.5% or 5%? No one knows, also since today someone is saying the opposite, affirming that recession will not probably come.
What we have seen in these weeks/months has been an amazing manipulation on global scale of money. Look at the big picture and go back two years: oil was 20$. Now is 90$. Where all the huge profit margins have gone? There are people, institutions and countries that are sitting on trillion of cash. This cash will be invested, sooner or later, in stock market. More likely, will be used to take over an entire country. Like USA.
It's already here: Dubai, Abu Dhabi and UAE funds have already bought out 5% of Citigroup. why did this thing happen' Try to remember...someone knew the numbers, someone pushed the button, someone managed the game from the backstage.

Probably I am a little bit paranoic, but thinking "bad" often takes you to the reality of the world.
i am almost sure there will be any kind of recession, probably just a slow down of the economy. A slow down is not recession, until you are into a Yahoo board and you are writing posts to push people panicking, to force other to sell you assets at a fraction of the value.

We have a great analyst here, with a great insight and very interesting picks.
Forget the short term and look at the big picture.
Try to remember a chart that David published some days ago: it was the chart of S&P since 1980 to date. Where money flow after the crash in stock market?
Again, into stock market.

The crash is going behind us, this is my opinion, probably there will be some volatility in the next weeks/months, but this is not a good reason to stay on the sideline.

Anyway, good luck in any case: if you decide to stay invested or stay in cash, enjoy your life :-)

Quote from: capricho on January 24, 2008, 04:13:07 PM
Jobless claims may be okay but workers are up to their eyeballs in debt and losing out with inflation adjusted stagnant wages. It's the debt burden placed on a consumer driven economy that will stifle growth.

I tend to agree with capricho.  The boom was credit driven.  No more credit = no more boom.  Consumers now have to focus on repaying their massive debts and stop buying cell phones and HD televisions. 

as always, is this daily posting still valuable for you?

Old Fool Notes – 01/24/08
Another nice day for the bulls on lower volume – a nice sign.  This two day move is starting to look reasonably encouraging for us old bulls.  The volume was 2.9 billion with a ratio of 3.1 to 1 in favor of the bulls.  Pretty good efficiency for 45 points.  I have mixed emotions about the "stimulus" plan.  The way I see it – the money will arrive too late and will just push inflation – resulting in a Fed reaction to jack rates.  Gotta love those politicos – always way behind the curve.  Oh well – we have to play the hand we are dealt.

The daily chart has made a nice move off the bottom – hope you caught it.  We still need a positive day tomorrow to add a nice sealer for the week.  If we get it, I can start an up channel.  Indicators moving the right direction but not yet a solid buy signal.  Given the volatility lately we may never see a firm buy or sell signal again.  LOL

On the other hand the hourly chart gave us a very strong buy signal off of 2225 and improved its position today.  This is q very nice – and promising chart.

The ratio chart continues to side with the bulls.  It is moving out of the hole nicely and could have run up crazy over the past two days – but did not.  That's good.  I want skeptical options boys that are slowly swayed to the bull side.  Nice chart.

The weekly chart moved positive today and it is very important that it stay positive through tomorrow.  Most likely, it will.  Be that as it may, this chart has a hell of a job moving forward – lots of work to do.

The Wilshire moved up nicely but at half the pace of the Naz.  I'll not critique a positive day but I really want hotter action here.

The P&F is amusing with 15 Xs stacked up today (accumulation of yesterday and today).  This chart does not tell us much except we had a hard reversal – but we all know that.  It also shows all of the work ahead.  Resistance is at 2650 – too far away to even consider at this point.

I am still focused on putting LT money to work.  I was again buying large cap tech and financials on the 10:30 dip - you know all the names.  Also added mutual funds at the close in the LT port.  I also slipped in 20% QLD on the dip in the TP.  I have now deployed 50% of my LT cash and all of the positions are on probation – meaning, if they misbehave they are gone.  Fortunately, it looks good at this point – up nicely (10-20%) on all positions.  My bottoming charts are turning up so I will continue to focus on deploying cash in the LT port.  Given the futures and Mr. Softy earnings report, we are looking at another gap up open.  It will most likely be sold, so wait for the 10:00-10:30 dip to buy.  Don't get in a hurry – there is a lot of room up there.

Charts link below,

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2071209

fyi shadow trader update:
http://www.shadowtrader.net/videos/sunday012708st.html

this is from another forum.

QuoteGood Morning, Traders. Strong market internals and a steady climb higher yesterday revealed a market that is firming up. A late afternoon sell-off was absorbed by strong buying into the close, as the value players stepped in to support and build upon last Wednesday's potential bottoming action. Viewing the hourly chart of the Russell 2k ETF (IWM) we see that small cap stocks are poised to confirm a break of the hourly downtrend line with a move above the tight hourly range. Similar patterns can be found on the hourly charts of the SPY, DIA, QQQQ, and MDY. MDY represents mid-cap stocks and appears to be the strongest as it broke above Friday's high into the close.

The best setups out there on the long side have made explosive moves off the lows followed by a two to three day tight consolidation. Home improvement stocks HD and LOW fit the bill and look buyable over the hourly downtrend lines. REIT's are still in play with VNO, AVB, and EQR consolidating in tight ranges. The beaten down broker/dealer index has made a comeback with GS, BSC, MER, and MS all poised to confirm a break of their secondary downtrend lines. The long setups mentioned over the past few days are good for a quick momentum pop. Please do not marry any of these positions. We would prefer that you have a "one night stand" with trades this week, and as always use protection (stops).

Lets see if the market can build on Monday's closing momentum and sneak in a small rally prior to Wednesday afternoon's extravaganza. Just a reminder to those getting pumped up on the long side.....please do not lose perspective. We are still in a downtrend, so any significant bounce in the market will have a large group of traders looking to short and an equally large group looking to 'get even' as prices crawl back to where those individuals bought. Though indices closed significantly higher yesterday, total volume on both exchanges was well off Friday's pace. Light volume rallies are the calling card of a bear market. The short term trend is up, but for now we do not see this rally having a very long shelf life.

Quote from: pinoleropuro on January 29, 2008, 07:16:09 AM
this is from another forum.

QuoteGood Morning, Traders. Strong market internals and a steady climb higher yesterday revealed a market that is firming up...........

Hi Pinoleropuro,

That passage you quote is subscriber (paid for) content from Shadow Trader. Probably best not to continue using that source and re-quoting it here as it is material people pay for.

Good Trading

Just a few quick words on the SPY:

- It appears that the fallout from "my bottom" forecast was due to a rogue trader in Europe. As you probably read, the young man (younger than I) bought a lot of DAX and CAC futures for Societé Generale, which had to be sold on a public holiday in the US, causing a massive sell off in Europe which propagated to the US on that Tuesday morning. This caused a $7.1 B loss in Societe Generale ... if they had prolonged the agony the bank could have faced bankruptcy (especially if there was an information leak) like it happened with the British Barings Bank, which was sold for 1 pound more than a decade ago after Nick Leesom made huge bets on the Nikkei futures;

- This massive sell off in Europe (which came as a surprise to me, especially because public holidays in the US usually translate into calm and illiquid days in Europe), prompt the FED to lower interest rates by 75 basis points, as we know;

- My take is the FED did this because it can. And it can lower rates an additional 50 basis points and take them down to 3% tomorrow. If this happens (I'm not sure that it will, though), I believe that this injection of liquidity into the system will surely drive this stock market to new all time highs. In my view the FED will be unwinding the excessive rate cuts in 9-12 months time;

- You can't wait for the recession to be over to buy stocks. According to the NBER, the 1990/91 economic recession in the US was over in March 1991 (of course, they only call the beginning and end of recessions 6 months or more after the fact). By that time the S&P 500 was already at new all time highs:



- The $137 resistance level on the SPY is the crucial level everybody is watching now. I've been reading many articles and opinions and I see 80% to 90% of them are bearish. This is a very strong contrary opinion setup. As I've said repeatedly, I would be worried if the market went down 20% and everybody remained optimistic about the future. All these pessimists of course don't have shares, they have cash. And the stock market is a money game, not an economy game. How would you explain that a very tough recession like the 1990/91 (with a GDP contraction of -1.65%) translated to a 20% drop in the S&P 500, and a very mild recession, the 2001 recession (-0.1% contraction), translated into a 50% drop?

- If the SPY closes above $137 I'll be very confident that it will rise at least 10% in 2008, to $160 plus. This should prop up the Main Portfolio to the desired 30% gain for the year.

Time will tell ... these are interesting times

With what I've said just above, what I would like to see today after the higher open would be a sharp sell off to build up some more short positions ... and then a rally back up by the end of the session.

This would be the perfect setup for the massive short covering rally that may happen tomorrow if the FED does the right thing (the right thing being pushing the market above $137, whatever it does to rates - the market reaction is more important than the FED action at this point).

But, who knows what will happen today ... and who cares? Stock investors shouldn't care.

Just writing this for you not to be scared if the market sells off after today's open ... that doesn't mean anything, it is actually more wood to tomorrow's fire.

David, belated happy birthday!

Is it still the plan to have stock of the month at the end of every month?

Quote from: realcoolhead on January 29, 2008, 09:51:30 AM
David, belated happy birthday!

Is it still the plan to have stock of the month at the end of every month?

Actually Ramsburg posed some valid problems to that approach and I'm thinking instead of starting a "Main Portfolio 2". This new portfolio would be exactly like the Main, with 15 stocks at the maximum and 6.66% in each position.

It would seem more logic to just expand the existing Main Portfolio to 30 holdings, but for that I would either have to reduce exposure to current holdings (which I don't want to do), or else add capital and that would cause changes on the return of the Portfolio (I wonder how funds deal with this issue?).

Anyway, I really need to have a new way of buying more stocks, or else it's hard to have an incentive to keep analyzing new companies (I know some of you sent me e-mails requesting an analysis - they were not forgotten and I'll do them).

Of course, the Main 1 will keep existing just as it is now.

What do you think of this realcoolhead?

I think the best way is to increase the number of  holdings gradually: from time to time, you will sell some of the current holdings, you then buy a bit less of the new stocks, say from 6.66% to 5%.

As your portfolio grows you will have to increase the number of holdings in buy these small/micro stocks due to liquidity issue, especially if many of us are following you. For example at the time you bought SILC, I guess you bought 2600 shares or so but I was only filled 800 shares and I didn't want to chase it to buy more. Perhaps you can be a bit flexible in allocating percentage of fund when you buy a stock? If a stock is quite illiqid you buy less than the current 6.66%, that way you can natually incease the number of holdings and for us who exactly follow you can also mimic the return of Main as close as possible.

Quote from: David Randolph on January 29, 2008, 11:01:47 AM

Quote from: realcoolhead on January 29, 2008, 09:51:30 AM
David, belated happy birthday!

Is it still the plan to have stock of the month at the end of every month?

Actually Ramsburg posed some valid problems to that approach and I'm thinking instead of starting a "Main Portfolio 2". This new portfolio would be exactly like the Main, with 15 stocks at the maximum and 6.66% in each position.

It would seem more logic to just expand the existing Main Portfolio to 30 holdings, but for that I would either have to reduce exposure to current holdings (which I don't want to do), or else add capital and that would cause changes on the return of the Portfolio (I wonder how funds deal with this issue?).

Anyway, I really need to have a new way of buying more stocks, or else it's hard to have an incentive to keep analyzing new companies (I know some of you sent me e-mails requesting an analysis - they were not forgotten and I'll do them).

Of course, the Main 1 will keep existing just as it is now.

What do you think of this realcoolhead?

QuoteI think the best way is to increase the number of  holdings gradually: from time to time, you will sell some of the current holdings, you then buy a bit less of the new stocks, say from 6.66% to 5%.

As your portfolio grows you will have to increase the number of holdings in buy these small/micro stocks due to liquidity issue, especially if many of us are following you. For example at the time you bought SILC, I guess you bought 2600 shares or so but I was only filled 800 shares and I didn't want to chase it to buy more. Perhaps you can be a bit flexible in allocating percentage of fund when you buy a stock? If a stock is quite illiqid you buy less than the current 6.66%, that way you can natually incease the number of holdings and for us who exactly follow you can also mimic the return of Main as close as possible.

That's also a good idea (Ramsburg shares your opinion)

I'll think about it and will let you know.

David, are you also addressing the timely profit taking on stocks that have a very steep increase over a short period of time, like PFSW, ASTI, SDTH and others did in the past? When a stock rises so much so rapidly, there's an imminent decline in the short term. It is very painful for some to see such profits as 50-100% slide. By selling stocks that peaked, you will most likely be able to pick them up later at a cheaper price. You keep a long term perspective on the stock, but capitalize on spikes.

On the other hand, stocks that rise gradually and double or tripple in a year or two, are more difficult to sell and then buy again lower, because they lack sharp peaks. Those can be ridden until a goal is reached.

QuoteDavid, are you also addressing the timely profit taking on stocks that have a very steep increase over a short period of time, like PFSW, ASTI, SDTH and others did in the past? When a stock rises so much so rapidly, there's an imminent decline in the short term.

It happened in these three cases, but multiple baggers don't always have big and predictable pullbacks along the way. It would be interesting to make some statistical studies on this issue.

QuoteIt is very painful for some to see such profits as 50-100% slide. By selling stocks that peaked, you will most likely be able to pick them up later at a cheaper price. You keep a long term perspective on the stock, but capitalize on spikes.

Or else I would lose my position. But I get your point and it would have worked well in the recent past.

Another problem of such approach is that it would be difficult if not impossible for subscribers to follow a trading strategy, as opposed to an investment strategy. It could be easy (it isn't) to sell a stock with a nice gain, wait for a 20%-30% pullback and then re-enter at a cheaper price ... but for 100 plus people to do it in a coordinated way it would be harder.

Moreover, the analysis wouldn't make much sense because most short term moves are unpredictable using a "scientific" or rational strategy  ... the trades would have to be based on feelings and instincts and that's an intimate and personal issue not easily understood by others who potentially don't share the same feelings and instincts.

I prefer to keep doing my best to find attractive long term investment ideas, although my goal remains to earn an average 30% annual return on the Main and I'm willing to adapt in every way I can to achieve this goal.

Thanks for the suggestions