Where to Buy?

When being patient waiting for a turn, it helps me to figure out logical buy points. From the cash S&P 500 index, I see the recent bull move was from 1224 to about 1460, a 236 point move. So I computed the Fibonacci retracement levels. The 38% retracement is around 1370, which is the low of Thursday. We'll probably open below that today - any support there intraday would be interesting as would be a close today at or over that level.

The 50% retracement level is around 1342, which [coincidentally??] is around the 200 DMA. That is a logical buy point, too.

The 62% retracement level is down at 1314, which is [coincidentally??] right at the magical 10% correction the seers on Bubblevision like to talk about.

Those are the levels I'm watching. The "real" news flow might help us select which would be a good spot. I expect to average into stocks at those levels unless something changes.

PS: [posted at about 10AM EST] I bought the last slug of India stocks at about 9:35 AM to get my India long term investments up to 6.7% of the value of the Krypto Fund (India specific investment is NOT included in the Krypto Fund amount).

PPS: the times the blog site gives for my posts seem to be PST - I suppose because Google is in California

Market Update

I bought some more oil stocks early afternoon Friday. I think the selloff in those is stupid as the data show very strong demand for gasoline. I added to positions in CVX, XOM, DVN, MRO, and COP. I added a little CHK, too, as the natural gas excess supply has been whittled down nicely and prospects of a hot summer are good.

I am planning to start to buy US stocks soon to replace some of those sold recently. I think this is a correction in a bull market, not a change to a bear market. Of course, more bad news could change that.

Who Believes Govt. Data Overstates Inflation?

Wowza, talk about the ivory tower.

Ben Bernanke, quoted in a Reuters story as seem on Yahoo News today:

"Bernanke also told his audience the Fed agrees with studies that say government data overstates inflation data. 'I still think that there's still some overstatement, and Federal Reserve estimates are, depending on the indicator, somewhere between half a percent and a percentage point of overstatement of the inflation rate,' he said in response to questions."

I suspect that the overwhelming majority of people OUTSIDE of Washington DC and university faculties would say that government data UNDERSTATES inflation substantially. I agree with that. I think the government data uses so-called "quality" adjustments to cause large understatements.

I suppose IF I was paranoid or believed in conspiracies I would think that the government does this to rob people of the benefits of their Social Security and to under-index tax bracket intentionally so the government can collect more tax money from its inflation. Hmmmm.

More Gold

Added another 1/3 position in gold futures. I'm averaging in for a month trade.

PS: just added some more silver, too. Still not a full position.

PPS: as of 11:44 AM EST, have full positions in gold & silver for this month trade

More Madness

Sheesh. I just heard a guy on Bubblevision talking about the "meaning" of the "VIX" and options on the VIX. Those are a derivative of a derivative of a derivative of a derivative - a fourth generation of a derivative. He was seriously saying how the "market" in those meant something about the size of the correction for the future, sort of like the "market is always right" crowd. That's just ridiculous. A bunch of beefers swinging money around means nothing except in their own crowd & P&L, like a ping-pong game among themselves.

The Market is Often Wrong

I hear the comment often that "the market is never wrong". That statement reeks of implying a godlike status to "the market", like the early gods of nature such as the sun, moon, wind, and the forest gods. Whilst properly defined in time extent and as groups, a static market level of prices of liquidly traded securities is never wrong in my humble opinion, when examined in detail in smaller time slices and for individual securities and for dynamical changes, I believe it's clear that "the market" is often wrong.

Obviously the market miss-prices securities when material news is not available to the public. And the market clearly makes mistakes in interpreting economic trends and the thinking of public officials such as the Fed. And daily errors are obvious in prices of momentum stocks, some IPOs, etc. Sector valuation errors occur all the time. Moreover, the existence of profitable stock trading ipso facto proves the "market" is often wrong in small time slices.

I make successful intermediate term trades by discovering errors in "the market". Market prices at any point in time are determined by motivated sellers & buyers. When groups of these collectively make mistakes, they cause market prices to be wrong "at that time". Beefers make errors all the time and drive "market" prices to wrong levels. I make money finding their errors. Uh oh, maybe I should like them. :-(( & ;-)

Bad News for Beefer Bubble

I read that business school students are flocking to presentations by hedge funds, and that some hedge funds are looking there for some new hires. That reminded me of the rage in 1999 or so of B-school students going to high tech start-ups instead of traditional employers. As that was a sign of peaking then in the high tech bubble that soon blew up, I wondered as I read the article whether this interest by B-school students is another sign of a top in hedge funds - namely, their number, size, performance and ability to attract money. I'll write more on this subject later, but you can guess my answer - yes.