Thread: FireWeatherMet Account Talk

Didn't have time to post before trading deadline, but used my 2nd June IFT to throw my remaining 50% out of -G- and into the -C-.

This move could bite me badly in the short term if the markets react negatively to the Fed announcement, but too many factors pushing me to go all in:

1) My system has me going into stocks whenever I make gains on the major indices.
At my last IFT in late May I was 1% ahead of the C and 6% ahead of the S. Sitting out during the last market drop has me now 7% ahead of the C and nearly 15% ahead of the S.
In previous years whenever I successfully dodged a major market downturn, I would sit there and pat myself on the back, only to see a ferocious Bear Market Rally wipe away any 5-10% gain I had from sitting on the -G- Lilly-pad.

2) S&P has been down for 5 straight days, thats rare. Even more rare, the ferocity of the downturn, S&P dropped over 7% in just 3 days.
That massive free-fall seemed to be related to the fact the markets had baked in a 0.5% rate hike, suddenly the chances of a 0.75% hike went from near 20% to better than 50/50.
But this AM most financial analysts on Bloomberg and CNBC said the market is now expecting an 0.75% hike, which would signal the Fed is serious about inflation, and might be perceived as favorable, and that 0.50% might signal the Fed would remain behind the inflation curve.
One guy did say if the Fed went with a whole 1%, that could send some short term shock waves...but that it would be temporary.

3) Due to the huge drops of 2-5% per day on some of the past few days, some big open gaps appeared on the indices. Those would be short term targets, before considering exiting stocks again.
Tom did a nice chart of them so I'll just post his here below:

So all in all, a bit of a gamble throwing the rest of my cash into the market, but it seems the rewards a few days from now should outweigh the risks, (hopefully). Leaving old position of 50% C 50% G and going 100% C COB today.

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Well, my timing made me "King for a Day" or at least joining the months Smart Money. (below)
That will all change with the new big down numbers coming in...but I still feel good with our big over-sold position that the bottom is close and that in 3 days (or 3 weeks) I can end up with an exit price that's higher than what I bought into.

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Well, profited pretty nicely with my brief entry into stocks a week ago. If stocks close near current levels should be up over 3% for the month, and currently 7% ahead of C/I funds, and 16% ahead of the S.
Tom has been mentioning the "Open Gaps" in the S&P for several days now, and todays big move up has filled the big Lower Gap (see chart below)
We may or may not fill the 2nd gap, but with a few days left in the month and always another exit into G move available, I'll start locking in some profits and shaving my C position and play with the "House's $$".
Leaving 100% C and going 50/50 G and C COB Today.

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FWM,
The upper gap you talk about I hope gets filled sooner than later. There was a gap that bquat showed on his chats that was around 1540. That gap started around 9/15/20 and got filled on 6/16/22. The most recent post #13161 shows the gap and post #13164 shows the gap being filled. I sure hope we don't wait almost 2 years to fill this upper gap.

Don't like how markets are starting to lean over again. Will lock in June profits by shifting the rest of my $$ from C into G.
Using 4th IFT (allowed when going only into safety) by leaving 50% C/50% G position and going 100% G COB today.

For those looking, I did move the free G fund moves posts to a new thread:

TSP Limits Plus Free G-fund Moves

I've recopied a post I did on Tom's Market Talk a few days ago, regarding price of oil, inflation, recession and market lows:

"I think a Recession has already been priced in.
Definition of Recession is 2 straight quarters of negative GDP. We already had -1.6% GDP 1st qtr of 2022 and estimates are of an even higher negative # this quarter.

But price of oil is almost entirely GLOBAL supply and demand, minus refinery issues and geopolitical (WAR).
So in 2020 OPEC...at the request of the then-US President (trying to not get too political) agreed to CUT Oil Production. Oil prices then took off ever since, combining with post "Severe Covid" travel demands in 2021 as well Russian invasion/sanctions early 2022.
https://www.cnbc.com/2020/04/13/opec...an-yergin.html

However, that 2 year Oil Production Cut deal just ended, and OPEC just announced Oil Production HIKES, to go into effect next month, which almost always tends to lower oil prices, especially when coupled with the recent drop in demand as gasoline prices are at record high levels, less people taking long road trips, boating or driving RV's.
https://www.cnbc.com/2022/06/30/opec...ns-linger.html

So I doubt its mostly based on recession fears, as we probably "technically" started recession back in January and the near 30% drop in the S&P from recent highs likely priced most of that in. I think its mostly supply & demand...just basic Capitalism.
This could be good news for all of us, as lowering oil prices by itself would eventually lead to lower prices at the pumps, combined with the fact that after July 4th we are going past the summer-time travel peak.
This could help with inflation soon....which could reduce the fears of massive future rate hikes...and might make markets soar sooner rather than later....meaning we might be closing in on our market lows (hopefully) and might need to think about getting in, and staying in, stocks soon. IMHO."

Also heard a chartist on Cramer saying a bottom may be here. Not 100% confident on that...but feeling is sellers have run out of steam (for now) Ukraine war on pause for a few weeks and oil down huge in past 2-3 weeks....seems like at least a shot upward to fill the 1st open gap on SP500 (also exists on Small Caps). Thats a 3-4% jump from here, and too much to pass up.
So Leaving G position and going 50/50 S and C COB today.

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So far so good, after my move back into stocks. I've included the S&P chart (below) to mark out some key indicators for me, and guidance of where to go from here.

On July 7th, I noted that there were 2 "Open Gaps" on the charts (Tom first pointed them out on his daily wrap-ups) and as Tom says...these gaps usually (not always but most of the time) get filled.
I jumped in as the 1st gap was partially filled...and have been eying the 2nd gap that was about 4-5% higher, as the 1st target.
Well, now seems like we pierced the lower portion (as of this writing because things could change into the close), and have another 1% upwards potential to fill this 2nd open gap.

Now the question is...what to do after that?
If we were in a more classic "1-3 week Bear Flag", I would be phasing out and selling now. BUT...we are in a 5 week climb, and still surging upward even today, when there were all the reasons in the world for us to go negative (several huge monster up days that typically result in profit-taking & President getting Covid).
What could be the reasons for this? Well, to borrow the 1992 campaign slogan "Its Inflation, Stupid".
Fear of runaway inflation...sparks fear that the FED will spend years raising rates, trying to get it under control...like the 70s into the early 80's.
That leads to fears of a severe, long lasting recession.

BUT...what's the prime driver of recent inflation? Answer is OIL...along with supply chain issues along with Ukraine War and related energy and food disruptions from that.
So lets look at the biggest issue...OIL...has dropped suddenly about 25% since its peak in June. Main part is OPEC has decided to produce more, as is the US now, due to increasing embargo restrictions on Russian oil.
We are now seeing prices at the pumps down 30-40 cents/gal from the recent highs. And July 4th is peak summer travel season, and by end of Aug/post Labor Day, pump prices typically drop more significantly.
So...the threat of RISING inflation seems to be over. But by no means are we returning to "Pandemic level" prices, part of those lows was simply because economic conditions were so bad in 2020 into early 2021.
But the market is a forward looking indicator, and it is "thinking" what is inflation going to look like 2-3 months from now? If chances are that inflation stays where it is or starts descending slightly, then its likely the June low was "The Bottom".
Here is some support to that thinking. https://www.marketwatch.com/story/he...?siteid=yhoof2 From article:
"The S&P 500 has never lost ground over the following year when advancing volume was at least 85% of volume for two out of three days coming off a 52-week low, according to Jason Goepfert, the founder of Sundial Capital Research. That has happened 13 times."
"The signal is incredibly strong on the junk-bond side. In the nine previous times when the CDX HY spreads fell at least 75 basis points in three weeks, the S&P 500 rose over the next week, six months, and year, with 22% average returns over the next year. "

Another thing to consider, even if the June low was not the bottom, nost bear markets tend to have at least a "50%" retracement form the previous lows.
Looking at the S&P chart below, we still have a ways to go, we've surged past the 50 day EMA, and the next target (Oscar Carboni's fav) is the 100 day EMA (light blue line).. Just above that, is the approx "50% retracement". That's another 4-5% upward move, and definitely NOT something you want to miss.
So I'm going to at least consider staying in equites (C/S) until we start approaching those levels, even after the 2nd gap gets filled...but will watch oil prices, the FED, and world events, very carefully in the coming days/weeks/months.

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I'm sensing still a lot of fear and trepidation that many still feel, thinking we are in an endless loop of "Bear Market Rallies"...that's what gives the juice to the massive bounce of what ends up being the market low.
Reminds me of a smaller scale March 2009...when "perma-bears like Roubini kept saying its just another Bear market rally...and Fox Business News viewers kept hearing "The Other Shoe IS About to Drop" for months and even years after the strongest Bull Market in History was well underway.
When Most people feel the "Bottom Is In" you're usually already 10-20% off from the bottom, and hopelessly behind the major indices. Damn...I feel like I'm "channelling" BirchTree...for those long enough here to remember.

10-12 years ago we had "Helicopter Ben (Bernanke). Today we have "Powerlifter Powell" who will likely "deliver" once again with the upcoming Fed announcement.

Opinion: We’re probably in the early stages of a new bull market. Nervous? Start with these 5 ‘moat’ stocks

"The odds are good that June 16 marked the stock market’s low, and we are in the early stages of a new bull market."

"Inflation is rolling over. Supply chains are repairing. There is enough terror in the market to suggest we are near the bottom. I encourage you to increase stock exposure."




https://www.marketwatch.com/story/were-probably-in-the-early-stages-of-a-new-bull-market-nervous-start-with-these-5-moat-stocks-11658842276?siteid=yhoof2

Powerlifter Powell absolutely has to bang interest rates higher to deal with inflation.

Powell doesn't want to be the guy with a legacy of causing hyper-inflation

Winter is coming. Night is coming. Recession is coming.


It will be a long winter - where neither stocks nor bonds work. Cash sucks as well in a time of inflation. Happy times. Hunker down.

I think we will all look back at 2008 with misty eyes - thinking of all the good times we had. Now we have a slowing economy, high energy costs, a heavy regulatory regimen, business fear, and a partridge in a pear tree. Dumping three trillion borrowed dollars into our economy was probably not the thing the FED wanted done. But, we got it done!!! Now, all the FED has to do is soak that three trillion out along with the slop they threw into the bucket over the previous years. Happy times.

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Originally Posted by Boghie

Powerlifter Powell absolutely has to bang interest rates higher to deal with inflation.

Powell doesn't want to be the guy with a legacy of causing hyper-inflation

Powell doesn't want either "runaway Inflation" NOR does he want a long, deep, "Fed-enhanced" Recession being his legacy.

That's why you saw "POWERLIFTER-POWELL" announce the expected "lower end" rate hike today...with no hike next month (FED on vacation)...and his statement that we're not in for any bad recession.
And that's why you saw the market take off 2-3% (sadly without you).

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Originally Posted by Boghie

Winter is coming. Night is coming. Recession is coming.

It will be a long winter - where neither stocks nor bonds work. Cash sucks as well in a time of inflation. Happy times. Hunker down.

I think we will all look back at 2008 with misty eyes....

Too much "Game of Thrones" is almost as bad as too much "Foxiganda" when making important investment decisions.