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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (2418)	4/19/2003 5:28:39 PM
From: sun-tzu	Respond to of 10065

just call me lucky

To: Justa Werkenstiff who wrote (2418)	4/20/2003 5:26:02 PM
From: sun-tzu	Read Replies (1) \| Respond to of 10065

donald and lee don't seem as positive... Posted on Sunday, April 20, 2003 - 2:37 pm: -------------------------------------------------------------------------------- Burk - I wasn't singling you out in my post. If you will note, I put that comment on a separate line than the one addressed to you. It seems lately with the prevailing market conditions and whipsaw gap moves, everyone is on pins and needles. SI has turned into a cess pool the last few weeks with long time posters suddenly lashing out at well respected posters. Anyway, enough about that. ========= I spent a couple hours on the phone with Donald last night and we discussed some interesting market developments we have noticed. He also spent about 5 hours with a well respected statistics guy (non-market related career) and they also discussed various market related things to see how non-market math conformed to market formulas etc. If we don't sell off, it will be a first in a long time that multiple indicators have failed. Donald will cover most of this tonight but look at Advance decline vs index movement, VIX action, most of the commonly used Oscillator and over sold/overbought indicators. Even many trending indicators are saying we have moved beyond normal relational norms. In a "normal" recessionary environment, moves like this could happen and should almost eventually be expected. In past recessions, both businesses and consumers hunker down and stop spending so that earnings are depressed. PE ratios, Price sales etc look like crud and the initial move up looks silly yet as things improve, there is a massive return of spenders to beef up earnings and the valuation models return to more normal levels. In these cases the market is looking ahead and pricing in the better times ahead. In this latest recession however, the consumer has not slowed down spending and there is little to spur businesses to spend since they already have most of the databases they need, if they were smart, they replaced their computers when they were all but giving them away and they beefed up the memory on their storage devices and servers when prices collapsed the last year or so when the fabs were cranking out as much as possible to win market share. Consumers cashing in their 125% home mortgages have been on a spending spree and haven't slowed down despite the risk of losing their jobs at any moment. I went to a Ford dealer yesterday to get a part for my truck and there must have been 20 couples in the little buying booths signing papers I can nly assume were new vehicle orders. At the same time, we hear how bad sales and earnings are. How much better can it get? Stocks like PG are hoping consumer staples will be the first to bounce yet again, how much better can things get? People are too lazy to mop their floors the old way so buy disposable swishers that are glorified handy wipes to do their floors. Has the consumer hunkered down when they are still buying "wants" hand over fist and not scaling back to just "needs"? As Donald and I talked, he posed multitudes of indicators and studies that show we are very close to a top and is pretty much convinced we should go short if not already by next week. I am however troubled a bit by what I see in individual stocks like EBAY, YHOO, AMZN, CMCSK and even my own HCN which I dumped on a sell signal only to see it climb ever higher with 3 negated sell signals per my system. My concern is the proverbial "they" might hold this up longer than expected and may even push future gains to squeeze out the shorts and cause our systems to go negated and thus short term worthless making us blind as to when the inevitable drop may come. I see nothing in the economy that shows that earnings will improve enough to over come the huge debt loads, pension problems and foreign desires to dump dollars if not for fundamental reasons like our increasing debt vs GDP, then politically for our global police state attempts. ========= My strategy is to continue my scaling back of longs and possibly even my hedged positions to increase cash and then if the drop starts as scheduled per our normal indicators, go short a bit. However if we continue to climb or hold in a distribution pattern, then I will keep raising cash and get ready for trending indicators to point to the reversal like Mrs. Wolfes 5 under 15 EMA or something like that. Another thing that bothers me is that neither DOnald nor myself have weekly sell signals though we are both close. I have a weekly sell on the NDX but he does not. He has a weekly sell on the Russell 2K but I do not. On the other indexes, we are close but neither of us have sell signals. On our capitulation indicator and our first indicator, we are at or near sells on most indexes but it is not an exact indicator. It kind of moves to the trigger level but then has varying levels of peaks so we almost have to wait for the reversal to fire the actual signal and let us know how short to go depending on where the trigger occured. Needless to say, the longer this takes, the more short we will want to be. If this waits until my Late April/early May cycle turn, great, if it waits for the Norm later May turn, even better in my mind. In a longer term look, I pointed out to Donald that it is too early to say for sure but I am seeing signs that we may be entering a cyclical bull trend since our indicator just made a higher high and higher low for the first time in 3 years. It would have to be compared to a longer term level to say for sure so we are now watching to see if the drop can be delayed and we can get all the way to our March 2002 level for a better comparison. Fundamentally, I don't see how this could happen but I would have to speculate that events unfurl that will screw over the little guy to save big business. Tax breaks to help the wealthy that put the most money to work in the market. The pension laws go through allowing the companies to cut the older workers funds 50% by switching to the cash plan thus wiping out all the stock valued shortfalls and a controlled devaluation of the dollar occurs to enable foreign sales to tick up while making things here for the consumer more expensive since they mainly consume foreign made goods. Anyway, this got longer than intended and I need to go give LOWES more of my money. Happy Bunny day all, Good Luck, Lee