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Thanks Eddy,
Hope you stop is tight if you are short...
thanks Gizmo
It's the Cycle, Stupid!
By SY HARDING
UNLESS I'M LOOKING AT the wrong calendar, stocks are headed for a rough patch next year. That's because 2006 is the second year of a presidential term, and the market historically hits a significant low in those years.
The trend has been strongest in long-term, or secular, bear markets, such as the period of 1965 through 1982. But the pattern has been clear through bull and bear periods alike -- and through war and peace, rising and falling interest rates, high and low inflation -- regardless of which party was in power.
The good news: Stocks' low point in a presidential term is usually followed by a strong rally. In fact, counting all presidential terms since 1934, the Standard & Poor's 500 rose an average of 50% from the second-year low, to the high in the next year. So, the slump of 2006 could well mark another tremendous buying opportunity.
The forces behind the pattern are just as clear as the pattern itself. In the second year of a term, Washington launches stimulus efforts to make sure the economy and the stock market are in good shape by the time the next election rolls around. This has been true even for second-term presidents like George Bush. After all, they want their party to remain in power.
The problem is that those efforts usually create excesses that need to be corrected after the elections, so the market often takes some hits in the first two years of a term.
Wall Street's seers assure us that markets can't be timed. But the fact is, an investor would have reaped a compounded return of more than 300% from the 1965-to-1982 secular bear market by simply moving to cash at the end of each election year and not buying again until the low in the second year of the next presidential term. In contrast, the Dow climbed just 38.5% during this span.
THE PATH TO NEXT YEAR'S LOW is likely to be bumpy: Stocks have a history of hitting lows in October or November and then performing favorably until May.
That seasonality is created by the huge extra chunks of money that flow into the market beginning in the fall and continuing until the spring. They include capital-gains distributions from mutual funds; year-end dividends and bonuses; year-end contributions to 401(K) and IRA plans; and income-tax refunds. When the flows end in the spring, the market becomes increasingly vulnerable to any selling pressure.
The Bottom Line: Stocks could suffer seasonal downdrafts in the next two months and reach a significant low in 2006. But if past presidential cycles are any guide, the market then may climb 50% in the next year.
As with stock trends in presidential cycles, many on Wall Street dismiss seasonality as a myth. But, again, the results are clear: Over the past 50 years, a strategy of investing only in the favorable seasons and sitting out the other months would have almost tripled the performance of the S&P 500.
The pattern didn't hold up in 2003, when the market continued to soar through its usually unfavorable season. As a result of a massive stimulus package from Washington, the economy and the market got the same type of boosts in 2003's unfavorable season that they usually get only in the favorable season. That's unlikely to happen often.
Despite the seasonality of stocks and the clear trends during presidential cycles, many on Wall Street have been sounding a bullish note. They're convinced that stocks can't top out while the economy and earnings remain strong, and that the market will do even better if the Federal Reserve stops raising interest rates.
History suggests otherwise. After all, the economy and earnings also were strong in early 2000 -- so much so that the Fed kept raising rates through May 16. It was not until after the Fed stopped raising rates that the market really turned south, becoming the 2000-2002 bear.
Just a few things to think about.
Patroit Day--9/11/05
Dear Friend,
Pearl Harbor was bad but I think 911 was worse. I invoke Pearl Harbor for obvious reasons. Until 9/11/01 came along, the 12/7/41 attack on Pearl Harbor was viewed as the most egregious attack directly against America in our nation's history. I am of the strong view that we would do well to remember 9/11 every single day, at least in general terms. However, the day on the calendar has almost arrived again to do so in a more specific way, particularly to remember our thousands of fallen brothers and sisters. Please take a moment out of your busy morning/afternoon/evening to remember...
Don't ever forget... http://attacked911.tripod.com
Patroit Day--9/11/05
Dear Friend,
Pearl Harbor was bad but I think 911 was worse. I invoke Pearl Harbor for obvious reasons. Until 9/11/01 came along, the 12/7/41 attack on Pearl Harbor was viewed as the most egregious attack directly against America in our nation's history. I am of the strong view that we would do well to remember 9/11 every single day, at least in general terms. However, the day on the calendar has almost arrived again to do so in a more specific way, particularly to remember our thousands of fallen brothers and sisters. Please take a moment out of your busy morning/afternoon/evening to remember...
Don't ever forget... http://attacked911.tripod.com
TTT--12 Sep 05
Current Action Limits & Allocation Percentages:
F Fund No buy at current level. Current portfolio allocation is nil.
C Fund Sell all shares if SPY is < $122.55 and move proceeds to G Fund. Current portfolio allocation is 25%.
I Fund Allocate 50% to I Fund if EFA is between $57.34 and $56.15. If EFA is < $56.15, move proceeds to G Fund. Current portfolio allocation is 25%.
S Fund Sell all shares if $EMW or DWCP is < $528.21 and move proceeds to G Fund. Current portfolio allocation is 25%.
G Fund Current allocation is 25%.
How to Use the Action Limits:
The cut-off time for interfund transfers is 1200 Eastern so check the price of the proxy ETF or index around 1145. If you have a brokerage account, that's best as the quotes are real time. If you use the Web, normally, these quotes are 20 minute delayed.
Compare the value of the ETF or index against the recommended action limit(s) and take action, if indicated. Make sure asset transfers and asset allocations are the same percentages so you will be making at minimum two transactions when a change is warranted.
The TSP Web address for asset transfers and asset allocations is http://www.tsp.gov/account/index.html
Patroit Day--9/11/05
Dear Friend,
Pearl Harbor was bad but I think 911 was worse. I invoke Pearl Harbor for obvious reasons. Until 9/11/01 came along, the 12/7/41 attack on Pearl Harbor was viewed as the most egregious attack directly against America in our nation's history. I am of the strong view that we would do well to remember 9/11 every single day, at least in general terms. However, the day on the calendar has almost arrived again to do so in a more specific way, particularly to remember our thousands of fallen brothers and sisters. Please take a moment out of your busy morning/afternoon to remember...
Don't ever forget... http://attacked911.tripod.com
W@G1 QQQQ 09/12/05 for a 09/14/05 close~
40.29 frenchee
QQQQ Analysis: 9 Sep 05
What a difference a week makes! Got stopped out at 39.24 for the short and I'm now looking for a run between 40.14-40.68 before a meaningful reversal. Max dowside risk should be between 38.64-39.
On the weekly chart below, note the following points, both + and - which suggests the weight of the evidence is now to the upside for next week:
1) Parabolic SAR continues to be on a sell. However with the ADX below 20 this signal isn't valid.
2) RSI now in a positive configuration as well as Slow Stochastics. +
3) Closed above the 61.8% Fib retracement level. Implies a minimum move back to 100% retracement area. +
4) Fast and slow MACD in bullish configuration. +
5) QQQQ held at trend line support. +
6) QQQQ closed in the upper half of the Bollinger Bands. + New target is the upper Bollinger Band.
7) Volume not convincing with current upswing from the April lows. Sometimes when prices are up and volume are declining, the current market is weak in that short sellers are covering positions, causing a rally, and money is leaving the marketplace. -
8) MFI has a negative divergence with price. -
9) Chaikin Oscillator still in sell mode. -
10) Positive DI tracking above negative DI and expanding. +
$$$$ :)
W@G1 QQQQ 09/12/05 for a 09/14/05 close~
40.14 frenchee
Move Over Adam Smith: The Visible Hand of Uncle Sam
http://www.sprott.com/pdf/pressrelease/TheVisibleHand.pdf
Large Solar Flare May Bring Disruptions
Sep 7, 6:33 PM (ET)
WASHINGTON (AP) - A large solar flare was reported Wednesday and forecasters warned of potential electrical and communications disruptions.
The flare was reported by the National Oceanic and Atmospheric Administration's Space Environment Center in Boulder, Colo.
Significant solar eruptions are possible in the coming days and there could be disruptions in spacecraft operations, electric power systems, high frequency communications and low-frequency navigation systems, the agency said.
"This flare, the fourth largest in the last 15 years, erupted just as the ... sunspot cluster was rotating onto the visible disk of the sun," said Larry Combs, solar forecaster at the center.
The flare has affected some high-frequency communications on the sunlit side of Earth, NOAA reported
TTT--9 Sep 05
Current Action Limits & Allocation Percentages:
F Fund No buy at current level. Current portfolio allocation is nil.
C Fund Sell all shares if SPY is < $121.27 and move proceeds to G Fund. Current portfolio allocation is 25%.
I Fund Allocate 50% to I Fund if EFA is between $57.13 and $56.06. If EFA is < $56.05, move proceeds to G Fund. Current portfolio allocation is 25%.
S Fund Sell all shares if $EMW or DWCP is < $527.68 and move proceeds to G Fund. Current portfolio allocation is 25%.
G Fund Current allocation is 25%.
How to Use the Action Limits:
The cut-off time for interfund transfers is 1200 Eastern so check the price of the proxy ETF or index around 1145. If you have a brokerage account, that's best as the quotes are real time. If you use the Web, normally, these quotes are 20 minute delayed.
Compare the value of the ETF or index against the recommended action limit(s) and take action, if indicated. Make sure asset transfers and asset allocations are the same percentages so you will be making at minimum two transactions when a change is warranted.
The TSP Web address for asset transfers and asset allocations is http://www.tsp.gov/account/index.html
Thanks much mrusa1992
mrusa1992,
Thanks for posting the results of your model. The model has had good reliablity of late and helped to confirm some of my decisions relative to VXF. Appreciate it...
TTT--8 Sep 05
Current Action Limits & Allocation Percentages:
F Fund No buy at current level. Current portfolio allocation is nil.
C Fund Sell all shares if SPY is < $121.26 and move proceeds to G Fund. Current portfolio allocation is 25%.
I Fund Allocate 50% to I Fund if EFA is between 56.93 and 55.99. If EFA is < 55.98, move proceeds to G Fund. Current portfolio allocation is 25%.
S Fund Sell all shares if $EMW or DWCP is < $527.28 and move proceeds to G Fund. Current portfolio allocation is 25%.
G Fund Current allocation is 25%.
How to Use the Action Limits:
Cut-off time for interfund transfers is 1200 Eastern so check the price of the proxy ETF or index around 1145.
Compare the value of the ETF or index against the recommended action limit(s) and take action, as indicated. Make sure asset transfers and asset allocations are the same percentages so you will be making at minimum two transactions when a change is warranted.
The TSP Web address for asset transfers and asset allocations is http://www.tsp.gov/account/index.html
Thanks Ander
Follow the money...
Thanks for your opinion.
thank
Hello AJ,
What's your short-term read on PBW? Saw a bullish article on it in Marketwatch http://www.marketwatch.com/news/story.asp?guid=%7B08E4C6D5%2D2048%2D4D7B%2DAD8E%2D397C515D25FB%7D and wondering if it's time to short it. Chart looks overextended to me...
Thanks in advance.
You logic is sound. Thanks for the info and charts Ray.
Hello Bliss,
What's your short-term read on PBW? Saw a bullish article on it in Marketwatch http://www.marketwatch.com/news/story.asp?guid=%7B08E4C6D5%2D2048%2D4D7B%2DAD8E%2D397C515D25FB%7D and wondering if it's time to short it. Chart looks overextended to me...
Thanks in advance.
Good info Ander. Partially explains why my trailing stop for TLT was activated today.
Ray, why so bullish?
W@G2 QQQQ 09/07/05 for a 09/09/05 close~
38.95 frenchee
Wise move swing man as I got stopped out of my short this a.m. In cash with the profits until I decide what to do.
TTT--7 Sep 05
Switched out of the F Fund today as F Fund appears to be headed back to its 21-day simple moving average. Long-term interest rates are moving up. In contrast, all equity funds had a strong day today with I Fund outperforming all others. Current plan is to accumulate more F Fund on minor weakness.
Current Action Limits & Allocation Percentages:
F Fund No buy at current level. Current portfolio allocation is nil.
C Fund Sell all shares if SPY is < $121.20 and move proceeds to G Fund. Current portfolio allocation is 25%.
I Fund Allocate 50% to I Fund if EFA is < 56.45 and > 55.86. If EFA is < 55.86, move proceeds to G Fund. Current portfolio allocation is 25%.
S Fund Sell all shares if $EMW or DWCP is < $521.20 and move proceeds to G Fund. Current portfolio allocation is 25%.
G Fund Current allocation is 25%.
How to Use the Action Limits:
Cut-off time for interfund transfers is 1200 Eastern so check the price of the proxy ETF or index around 1145.
Compare the value of the ETF or index against the recommended action limit(s) and take action, as indicated. Make sure asset transfers and asset allocations are the same percentages so you will be making at minimum two transactions when a change is warranted.
The TSP Web address for asset transfers and asset allocations is http://www.tsp.gov/account/index.html
New England for week one.
wallabe_short
Market internals are still negative as your excellent chart shows. Your chart is also confirmed by $BPCOMPQ
W@G1 QQQQ 09/06/05 for a 09/07/05 close~
37.92 frenchee
QQQQ Analysis for 2 Sep 05
Got the bounce I was expecting last week but not enough to stop me out. Here's what I see in the tea leaves from the intermediate-term perspective.
On the weekly chart below, note the following points, both + and - which suggests the weight of the evidence is still to the downside for next week:
1) Parabolic SAR continues to be on a sell. -
2) RSI went on a sell five weeks ago and isn't close to being oversold. -
3) 50% Fib retracement is around 39.20. As a result, set my cover at 39.24 for trading on 6 Sep.
4) Fast MACD still on a sell today. - Slow MACD not yet confirming but is starting to roll over as shown by its MACD Histogram.
5) We are at trend line support from the low drawn from 34.32. +
6) Still closed in the upper half of the Bollinger Bands. + If we close in the lower half of the Bollinger Band next Friday, the implied target is the lower Bollinger Band with first support @ 37.92 and second @ 37.24. -
7) Volume not convincing with current five-week down trend. +
8) +DI trend still decreasing. - However, +DI increasing. +
9) Volume not confirming rally from Apr thru July. -
10) Andrew's Pitchfork support for the Apr thru July upswing still broken. -
Gizmo--changing stop to 39.24. Was taking a look at the weekly chart and 39.20 is the 50% Fib retracement point. Want to give a little breathing room...
Yup--39.10 for the QQQQ. Nevertheless, I've got my cover now at 39.20.
This is an unusual configuration for my portfolio:
I'm long SPY, EFA, TLT, and VXF. However, I'm short the QQQQ. This is the first time I've had this alignment. Since the bulk of my $$$ are with the longs, my bias is long except where it concerns the big boys of the Naz.
Have a great Labor Day Weekend!
TTT--6 Sep 05
Current Action Limits & Allocation Percentages:
F Fund Sell all shares if TLT is < $95.00 and move proceeds to G Fund. Current portfolio allocation is 25%.
C Fund Sell all shares if SPY is < $121.17 and move proceeds to G Fund. Current portfolio allocation is 25%.
I Fund Sell all shares if EFA is < $55.71 and move proceeds to G Fund. Current portfolio allocation is 25%.
S Fund Sell all shares if $EMW or DWCP is < $521.18 and move proceeds to G Fund. Current portfolio allocation is 25%.
G Fund Current allocation is nil.
How to Use the Action Limits:
Cut-off time for asset transfers is 1200 Eastern so check the price of the proxy ETF or index around 1145.
Compare the value of the ETF or index against the recommended action limit(s) and take action as indicated. Make sure asset transfers and asset allocations are the same percentages so you will be making at minimum two transactions when a change is warranted.
The TSP Web address for asset transfers and asset allocations is http://www.tsp.gov/account/index.html
Thanks XE
Eddy,
Your advice is sage because with 911 anniversary around the corner and attention on Big K problems, this is the opportune time to activate sleeper cells.
Good deal on your short. I've been short the QQQQ for some time now. Got some more short yesterday at 39.10. Most of my analysis is on #board-3358 Please stop by the board and share your ideas.
Perfect storm for inflation. Labor unrest, higher energy costs, increased costs passed on to consumer because of higher transportation and cost of product increases, Fed stopping the tighting of short-term rates, and the Dollar falling. GLD looking better and better...
Gizmo,
Got short some more yesterday @ 38.10. Currently, the set up we are expecting is working out. Nevertheless, will keep stop close if there's decisive long volume on Friday.
Good source of current news on Katrina recovery issues/progress:
http://www.nola.com/newslogs/breakingtp/