Comments on Fund My Mutual Fund: Housing Stocks Continue to Ignore the News

Mark: serious it is that simple. Cramer use to do...

2008-04-29T15:33:00.000-04:00

Mark: serious it is that simple. Cramer use to do it all the time on RM. I see the current noise as no different. The best thing about this calling the bottom and buy the dip methodology is this: 1) the odds are with you that you will be right most of the time by the time weekly charts get oversold; 2) if you are wrong when the monthly charts get oversold don't worry as we will be in a bear market by then and it won't be your fault as people will finally recongize that something is wrong. You will be allowed a free pass because it is a bear market and we just cannot do anything about that.

guy, thanks for the infoso when my daily chart doe...

2008-04-29T15:04:00.000-04:00

guy, thanks for the info

so when my daily chart doesnt work, i can go to my weekly, when my weekly doesnt work, i can go to my monthly. I can appear every 3 weeks and say "this is the bottom buy here" and when I am wrong I will just ask CNBC to reschedule me in 3 weeks where I will repeat the same message. I will repeat this process until at some point I am correct, and say "aha!" At that point Erin Burnette will give me a high 5, and Dennis Kneal will kiss me.

Now that works great if I am a TV personality. Not so much if I need to make money.

Devil is in the details.

Shax, I recommend cherry.. its the strongest form of Kool Aid.

**I own 2 homebuilders, not because I believe in a...

2008-04-29T15:01:00.000-04:00

**I own 2 homebuilders, not because I believe in any imminent rebound, but because no amount of bad news can bring them down anymore.**

That Kool Aid you are drinking must be real strong stuff....

Mark: Here is my version of Kool-Aid. It is the p...

2008-04-29T14:49:00.000-04:00

Mark: Here is my version of Kool-Aid. It is the pundit's guide to buying the dip. And all you need to do this analysis is a price chart and a momentum oscillator that measures how oversold the market may be.

First, let’s take a daily price chart of the S&P500, and for our momentum oscillator, I will use a plain old Bollinger band. According to the pundits, the market is oversold and a “buy” when prices tag the bottom Bollinger band. Oh geez by this analysis, I would have been buying all the way down since the market top in October, 2007.

But wait, we have weekly charts to consider. Or to put it another way, if the daily charts don’t work out, the market will eventually get oversold on a weekly basis. On a weekly chart, the S&P500 first closed below the bottom Bollinger Band on January 4, 2008. The calls got even louder: what a “buy” the market was back then.

But that didn’t work out too well either. Oh wait a minute, we have those all important monthly charts, and boy have the bottom callers gotten louder as prices tagged the bottom Bollinger band last month.

According to the pundit’s guide of when to “buy the dip”, if you don’t get it right on the daily charts, you always can make the call on the weekly charts. And if that fails, you always have the monthly chart. One of these dips has to work out. Doesn’t it always?

And that is how I view the current price action. Prices have gotten oversold on a monthly time frame. The “calls” for “this is the bottom” have grown louder and louder. Prices have bounced. And according to the pundit’s guide of when to “buy the dip”, one of these oversold dips has to work out.

Now my point here isn’t to discuss the usefulness of the Bollinger band, but to show you how the noise has gotten louder and louder as prices have become oversold on a monthly time frame. The reality is this: 1) oversold on a monthly time frame doesn’t happen too often; 2) sometimes it is the place to buy; 3) other times, it is not.

However, what is clear is this: failure of the bounce to materialize at this juncture is likely to lead to a protracted bear market. After all, what do the perma-bulls have left to fall on? The daily, weekly, and monthly charts didn’t work out. Oh my God, head for the hills!