Saturday, July 08, 2006

Tale of Two Timers

Below are the very latest market timing thoughts of two market timers, Harry Dent and Bob Brinker. I picked these two because their underlying methodologies could not be more different, Dent using social demographics and Brinker using textbook macro economic and fundamental analysis. Yet their outlook for the market going forward is virtually identical.

Harry S. Dent, July 3, 2006:

"Stong Summer Rally Very Likely Now"

"We saw everyday investors 'give up' on the markets to the greatest extreme back in April 2005, and now investment advisors have thrown in the towel to extremes here. This tells us that the markets have done their job in raising pessimism (without a big external event) and that we should be ready for a strong sustainable advance-the beginning of the next stock market bubble."

Bob Brinker, July 7, 2006:

"The mid-term off-presidential election year correction that began on May 10 has produced a pullback of 7.7% at its lowest closing level to date as measured by the Standard and Poor's 500 Index close of 1223.70 on June 13. So far the magnitude of this correction has been totally consistent with our expectations.....we regard the current mid-term off-presidential election year correction as a normal occurence within the context of an ongoing cyclical bull market. In our view, the stock market is attractive for purchase on any weakness that may occur in the vicinity of the S&P 500 Index 1250 level or lower. We expect the final closing low to be within a few percentage points of that level.

"When the 2006 correction process is over, we expect the cyclical bull market to resume with substantial additional gains which should carry the market to new recovery highs."

Stock Updates

I see a lot of questions from readers about individual stocks that I have written about in past blogs. Stocks I mention here are of two types, one consists of low cap, low-price-niche stocks that have huge upside potential either on their own or as part of the Stock Market Bubble, Part II that Dent writes about. For the most part, I own those stocks, in relatively small lots, tucked away in accounts and I do not monitor them very closely. If I did, it would be so tempting to trade in and out of them and take the risk of missing the big pay-off should it come. So I just don't follow them closely enough to comment on every dip or pop. My advice is still to put together a basket of a dozen of these names and see if one or two pay-off big time in the coming years.

The other type of stock I occasionally write about are very short term trading opportunities, usually triggered by a quality insider purchase of shares, or by some news event. Although my time line on these types of trades can range from minutes to hours or even a few days, that isn't to say that a longer term position trade isn't the best way to play these. A good Insider-Buy can sometimes support a stock for six months or longer.

The common thread in both types of stocks that I write about is that they are ripe for immediate purchase, but that exiting the positions are a subjective determination that varies with indiviudal trader/investor temperament, finances, goals, greed and thresholds for pain. In other words, I'll post an idea, you run with it as far as you care to, or not at all, whatever makes sense to you. That way, I can post trading ideas here freely, without remorse for trades that fail and you can pick and chose among those ideas and then manage them according to your own personal situations.

As you know, the frequency of these blogs has decreased in the past month. Apart from the market blood-bath in May-June that didn't inspire me to chronicle the agony our accounts, there was personal stuff, travel and some significant R&D on my own trading system that has had me pretty much occupied. Even this little snippet of Saturday morning ramblings has taken me 90 minutes, what with all the copyright infringement, spell checks and excuses for stocks that have tanked on us. But, hang with me, as I'm guessing along the lines of our two guest timers, that the some exciting market fireworks await us in the months ahead.



Anonymous said...

I'm hangin'. Thanks for writing.

philters said...

as always, allan - even those few moments that you chose to publicly spend with us are greatly appreciated, as is the time you take to express your thoughts so clearly and cogently.

Anonymous said...

Thanks Allan, I do hope we get some up in the markets and my holdings. For me though I'm not sure how an up market will be that great for me, with gold, uranium and bird flue holdings. Each a disaster play. ;-)

BTW, Taylor Trends latest suggests up through end of July, down to October then resumption of a bull market there after. (if I've assembled his forcasts into just one sentence correctly).

Has anyone been able to turn the Taylor timeing forcasts into a trading strategy? I'm of course interested in any details from the service or the book?

tnx curt

A said...

Has anyone been able to turn the Taylor timeing forcasts into a trading strategy? I'm of course interested in any details from the service or the book?

Taylor describes his use of the system in the book, a rather conservative but effective use of the timing method. He will freely discuss it with anyone, but does ask that they read the book first. I personally would trade it much more aggressively, but I have to watch it in action for at least 6-9 months first, That's where I am now, watching intently and keeping track.


Anonymous said...

Hi A:

I tried to email you yesterday, but received an error messaqge.

Can you email me please? I have a new tip for you.