Thread: Dr Faustus's Account Talk

Originally Posted by anidoc

I'm a little confused. It looks like oil and gold are down, the dollar and USM's are up. Am I missing something, because you see that the market is following price of oil and I don't see that at all right now? TIA.

According to CNNfn at 11:28am, the price of oil is $115.20 a barrel, up 0.34 from yesterday -- and the Dow is up 219.02. Seems like it has been that way in the past ... the price of oil goes up, the Dow goes up ... price of oil comes down, the Dow goes down.

I just don't understand this correlation.

Dan

Originally Posted by Dr Faustus

According to CNNfn at 11:28am, the price of oil is $115.20 a barrel, up 0.34 from yesterday -- and the Dow is up 219.02. Seems like it has been that way in the past ... the price of oil goes up, the Dow goes up ... price of oil comes down, the Dow goes down.

I just don't understand this correlation.

Dan

IMO, oil going up has killed the consumer. When we have to save so much
more then were use to, we stop spending on other things which affects
the economy. I don't know how high it will go and I must get to work. How
can I justify going to the movies and diner by spending my gas money.
Again, this is a consumer driven economy and we can't take much more !
Of coarse, I could start to Car Pool,,,,,,,,NOT !

The problem is the artificially low interest rates. Bernake lowers the rate which devalues the dollar which in turn drives up the cost of oil which then drives up the costs of all other goods.... = recession.

Why are interest rates low? To bail out a bunch of lenders who abused their position to commit fraud... why??? we don't want these stalwarts of the American Dream to fail do we? Ummm, yes we do actually... we need to cull the herd so to speak. <rant off>

Thanks Dan...Maybe G is not a bad place to be. Of the top ten members posting on the Autotracker...only one of them is in the markets. The rest are in either G or
F funds. And those in the F fund have been losing quite regularly. Out of the top 40 members posting on the autotracker, only 13 are currently in stocks with a portion of their funds. All of the stocks and bonds are down since last January and have only started to improve since mid- March. But stocks have gone up, overall, since mid March. Bonds haven't.
I'm still looking for the crash in stocks, as well. But maybe the S&P 500 mark of 1270 was really the bottom, and stocks are just taking a volatile approach to getting back on track. It is so volatile, that it makes getting in to stocks stressful. And as I write this, the market is up 221 points. Go figure... What to do...what to do. I really can't do anything for at least 5 to 7 days. I guess I am in analysis paralysis. Oh well!!!

Originally Posted by Dr Faustus

According to CNNfn at 11:28am, the price of oil is $115.20 a barrel, up 0.34 from yesterday -- and the Dow is up 219.02. Seems like it has been that way in the past ... the price of oil goes up, the Dow goes up ... price of oil comes down, the Dow goes down.

I just don't understand this correlation.

Dan

All the oil stocks go up with the commodity.

Originally Posted by Dr Faustus

Well, I've had it .... I was in F ... I switched to G today. Would have switched to the C and S funds (perhaps I should have stayed there, since that's where I was at the start of the month) but of course I can't do that under the IFT restrictions.

So I'm back to G. Hopefully next month will be better.

As for where to go with a "long term" move? I don't know. I've never even tried to project the market out for a couple of weeks or longer, I wouldn't even know where to begin. I'd be happy if I could gain about 1.5% per month which I what I used to do ... in for a few days and then get back out again.

The C and S funds are back at their +1 sigma levels and are looking to move higher today ... but will that last? I can't believe so. I don't understand why the market movement is correlated with the price per barrel of oil ... as the cost per barrel goes up, the market goes up. I don't understand that behavior at all, it seems totally contrary to me. I think the USMs are headed for another crash but I can't say when that will happen. But I am not willing to ride out the F fund until it does.

Start basing your TA on weekly charts.

Originally Posted by Dr Faustus

Well, I've had it .... I was in F ... I switched to G today. Would have switched to the C and S funds (perhaps I should have stayed there, since that's where I was at the start of the month) but of course I can't do that under the IFT restrictions.

So I'm back to G. Hopefully next month will be better.

As for where to go with a "long term" move? I don't know. I've never even tried to project the market out for a couple of weeks or longer, I wouldn't even know where to begin. I'd be happy if I could gain about 1.5% per month which I what I used to do ... in for a few days and then get back out again.

The C and S funds are back at their +1 sigma levels and are looking to move higher today ... but will that last? I can't believe so. I don't understand why the market movement is correlated with the price per barrel of oil ... as the cost per barrel goes up, the market goes up. I don't understand that behavior at all, it seems totally contrary to me. I think the USMs are headed for another crash but I can't say when that will happen. But I am not willing to ride out the F fund until it does.

Doc,

I used to wonder the same thing until I read somewhere (can’t remember where) that the SPX is not equally weighted. I just did a quick google search. Check out this PDF, scroll all the way down to the pie chart on the bottom for a break down of sectors by weight. http://www2.standardandpoors.com/spf/pdf/index/500factsheet.pdf

Financials, oil and a few others are heavily weighted in the index so when crude goes up the oil stocks in the index are weighted heavily enough to pull the index up.

Seems to defy logic. One would think that as oil prices rise and we have to pay more at the pump we would have less spendable cash to buy other things and the economy suffer and to some degree this is true. Seems that as oil goes up the markets would tank but that's just not the case.

IMO oil is near a high and will soon back off and when it does the market will likely still rise and the pundits will say it's because oil prices are closing lower and they will probably get some traction with that misstatement as oil continues to plunge (we will probably hear it over and over). But the reality is, it will likely be that one or more of the other heavily weighted sectors, perhaps financials, tech etc. will be pulling the index up so the impact of the oil sector plunging will be subdued and the market will rise.


optionman

Originally Posted by FUTURESTRADER

Start basing your TA on weekly charts.

How would you do this? Average for the week? Market value on a particular day?

Dan

Originally Posted by optionman

IMO oil is near a high and will soon back off and when it does the market will likely still rise and the pundits will say it's because oil prices are closing lower and they will probably get some traction with that misstatement as oil continues to plunge (we will probably hear it over and over). But the reality is, it will likely be that one or more of the other heavily weighted sectors, perhaps financials, tech etc. will be pulling the index up so the impact of the oil sector plunging will be subdued and the market will rise.


optionman

Interesting analysis. I think the price of oil (well, gas) will continue to go up through the summer and we will all be feeling the pain soon. I believe that most people factored their commute time into their decision on buying a house and so now they are stuck with a more expensive commute than they had planned for. This could have a serious impact on the rest of the market as mass transit really isnt an option for most Americans. It's easy for the pundits to say "Conserve your fuel by 10%" or "Just buy less gas" but I think these people are out of touch. Gas is not like any other commodity - it's not something we can simply choose to do without.

So I think the level of gas consumption is going to change on the national level but not enough to seriously impact the price at the pump. Which means ... well, you know what it means.

I've been perusing the Treads again. Found a good explanation on the IFT restrictions effective May 1. Looks like we can make two unrestricted transfers into and out of any funds, even the G fund. But after those two IFTs, you can only make IFTs into the G fund ( those moves are unlimited)....but not out of the G fund until the next month. Check out 12%'s thread for a clear explanation of how this whole thing will work, according to what the Thrift Board wrote (which is not necessarily the way it will really work).

Originally Posted by Dr Faustus

How would you do this? Average for the week? Market value on a particular day?

Dan

Instead of using daily charts, use weekly charts. Where a daily chart might show the SPX, for example, going into overbought territory, a weekly chart might still show room to the upside. It obviously takes out the 'daily' volatility, smoothes the curves, limits whipsaws, decreases time spent on analysis, and it looks like it will get you back in or out after market daily overeactions.