3/26/04

[Wheels]

Hardly anyone posting today. I guess the market action is humdrum too.

Tom - In a recent post you cited 1110 as a point you'd like to see the S&P hold at before believing that it could rise further. Was that a recent point of resistance? Also, where do you track volume on an intraday basis?

Thanks,

Dave

[tsptalk]

Yeah, a very non-committal day. Low volume. Could be a short covering rally. It wouldn't surprise me to see stronger action in the last hour. Which direction, I don't know. But someone needs to step up (bulls or bears).

Here's where I watch volume... http://quote.yahoo.com/m1?u

On today's comments page (http://www.tsptalk.com/comments.html) I have an S&P 500 chart. You can see this recent down trend hit up against the short term resistance line, which was about 1110. Any upside close today would penetrate that, which would be a good sign for the market.

Tom

[puertorico]

COM'ON SMART MONEY

GIMMME DE GREEEEEEEEN !!

[Wheels]

OK so now I can see the volume at any given minute but what do I use as a benchmark? In other words how do I know whether it's low, average, or high, particularly at a given point in the day (other than you or some analyst telling me that it is).

Dave

[tsptalk]

There is a 52 week range and a link to a 5 day chart on each volumequote page.

They give you an idea.

[GS083]

I guess we should of stayed in S fund one more day. We would of made a little more than the penny that the G fund gave us.

Bob

[tsptalk]

It could have been worse. We could have been in the C, F or I funds :P

All in all, a pretty flat day on low volume. Not too telling. A little late profit takingtook S&P into the red, otherwisepretty impressive actionafter Thursday. I expected moreselling.

Hey guys, when you our "out of the market" when do you determine the G fund versus the F fund? I mean, the F fund has a greater return historically but right now Tom, you advocate the G fund? What is your determining factor. By the way, the F fund is down. What determines up or down on this fund if it is "fixed".

Also,

I know that funds like Vanguard Index 500 represent the C fund pretty much as far as a good comparision, but what are the equivalent funds for the rest of the 4 funds (I know G probably doesn't have an equivalent) In other words, I need an equivalent fund that tracts the EAFE, Wilshire 4500, Bond fund. This may be an ignorant statment, please help.

Also, please explain what "covering a short" means and how that can artificially raise a price. Thanks

Joel

[tsptalk]

All good questions.

when you our "out of the market" when do you determine the G fund versus the F fund? I mean, the F fund has a greater return historically but right now Tom, you advocate the G fund? What is your determining factor.

We are kind of split here on this question. My thought is that interest rates are more likely to go up than down in the next several months. When rates go up, bonds and the F fund usually go down. When I'm "out" I like myassets to be safe rather than risk a day like today. During the recession, when rates were coming down, you would have been better off in the F fund than G. As I said, others herehave a different view.

By the way, the F fund is down. What determines up or down on this fund if it is "fixed".

Mainly, when bonds yields go up, bond prices, and the F fund, go down.

I know that funds like Vanguard Index 500 represent the C fund pretty much as far as a good comparision, but what are the equivalent funds for the rest of the 4 funds (I know G probably doesn't have an equivalent) In other words, I need an equivalent fund that tracts the EAFE, Wilshire 4500, Bond fund. This may be an ignorant statment, please help.

I would recommend you check out my rudimentary explanation of each of the funds on this page --> http://www.tsptalk.com/funds.html. If you still have questions, let us know.

Also, please explain what "covering a short" means and how that can artificially raise a price.

Whensomeonethinks the market is going to go down (a bear) he can actually sell stock that he does not own (called selling short). He thinks the price is too high so he sells. Eventually, he has to buy it back and he hopes he will do so at a lower price. He's trying to buy low and sell high, but in reverse.

Soif the bear has a bunch of short positions, and the market goes up, he is losing money. For him to get out of his position, he must buy the stock (called short covering). This buying looks likepositive action on the market indices, but it's just a guy getting out of a short position. Ifthere area lot of people in the same situation, you can have rallies that are quite exaggerated because of the short covering and regular buyers.

Make sense?
Tom

[puertorico]

Let see ! how selling short works

[PROFIT]

-You barrow 1 share at $10 from your broker.

-You owe 1 share to you broker

-stock price drops $7.50

-your cost to pay back the share $7.50

-and your profit $250



[LOSE]

1 share $10 ,borrow to your broker

stock price rice $12.50

you cost to pay back the share $12.50

and your loss $250



So,when the price of the stock goes up you lose,

when the price of the stock goes down you win .

Confused?

[tsptalk]

That's exactly right PR, except it would bea $2.50 gain/loss in your example, not $250.