The Charts

Unless I'm doing a mathematical asset allocation or making a major fundamental decision, I always look at the charts to get some guidance on the timing of a move that I am thinking about doing.

For example, I hold quite a bit of ORCL in the Alpha Fund. I've been wondering lately if I can get my target 30% in that stock over the next year. I'm up about 50% on half the position over about 18 months and about 30% on the other half over a year. So I've got long term capital gains treatment on all of it. The stock is about 21 and I need over 27 to get 30%.

Can that stock get there? Earnings are due today PM. Recent earnings growth is excellent with average quarterly year over year growth of 26% and good revenue growth, too. The PE is 20x. [I'm using data from http://www.dailygraphs.com/ - I subscribe to it.]. So if earnings growth continues, the stock is well undervalued. My growth valuation model gives a "fair" value of over 30 on conservative assumptions.

What does the chart say? The daily chart shows a bullish cup & handle near the break point. The weekly chart shows a bullish rough C&H, too. It's not extended and looks to be breaking into "blue sky" country. The monthly chart shows an uptrend out of a three year base. All these are good indicators. So I'm not selling now. I think 27-30 is possible as long as the company performs, which it has been doing.

The Indexes:
Ms. Market had solid buying yesterday, reportedly from public buying of mutual funds. That is excellent. Public mutual funds buyers are "real buyers" and can persist awhile. They've been missing from the market too long. Yesterday's solid move gave us the second close over the S&P 500's inverse H&S bottom pattern's neckline, confirming the move. There will be strong resistance at the old highs of 1555.90 and maybe at the prior 1540 peak, too. So some consolidation should occur.

The Russell 2000 confirmed the upside breakout over the ascending triangle.

Buy dips. It's a bull market.

YTD Performance:
The asset allocation moves I made in the Krypto Fund paid off. It's up year to date 7.9%, which is a high for the year. Gold and the real estate recovery helped a lot, too.

The Alpha Fund is also at YTD highs, +51.8%. The oils and miners have recovered and the banks are contributing now.

I've stopped trading commodities actively so will no longer mention that account. I just use it for gold & silver hedges or futures buys of physical gold & silver I want to take down, or for stock index trades now. I don't need the money or stress of trading commodities anymore.

PS: Babblevision is awash in bears this AM. "Sucker's rally" "Dead cat bounce" Talk about inflation when the facts show the trend in inflation is ... down ... and core yoy PCE inflation is ... under 2%. Lots of delusional bears. Good.

PPS: I cut back a bit at the close yesterday, taking some long term "sugar" [aka profits - LT gains] on some big positions. For example, I sold 20-30% of a few big miners and oils and AAPL. These are really big positions and I wanted to get down to about 150% net long again. I was very long ( 200%+ ) on the buying of the banks I did in this summer dip. I like to be only 150% long when we approach long term highs and beyond. Holding the rest - nothing has changed and I think they all go much higher. This was money management and I want more buying power if we get another dip in October.