Don Hays

Top 60. Jun 12, 2001 7:37 AM

» ourisman - increasing equity allocation

Yesterday, June 11, Don Hays increased the actual equity allocation of his managed accounts from about 71% to about 73%, moving closer to his 77-23 recommended allocation. He added to two current positions: Apache Energy (APA) and Fleet Boston Financial (FBF).

-- posted by ourisman

Top 61. Jun 12, 2001 8:59 AM

» Kirk - Re: increasing equity allocation

In response to message posted by ourisman:

Thanks David. It sounds like Hays is sticking to plan to buy the dips to get to his target allocation.

Does he have something for palandromes? Looks like good value picks with good growth prospects:
http://finance.yahoo.com/q?s=apa+fbf&d=t
I've thought about buying a company like APA myself but I really don't know the sector that well... but I like what it does and its valuation.

Do you think the Planks are like the JR & Jake Ewing of "Dallas" tv? They are a father/son team according to this: http://biz.yahoo.com/p/a/apa.html

-- posted by Kirk

Top 62. Jun 12, 2001 10:07 AM

» burkmorz - Re: increasing equity allocation

In response to message posted by ourisman:

Ourisman, did Hays have anything to say about the market in general? Any changes in his thinking about a CT rally lasting until end of the year per his last writings, etc? Anything you can post for us written by him?

Thanks!!

-- posted by burkmorz

Top 63. Jun 12, 2001 3:29 PM

» ourisman - burkmorz

In response to message posted by burkmorz:

Don wrote the following yesterday to open his commentary:

"If my scenario continues to fit the 1980 model that I’ve adopted as the most likely for the upcoming market scenario, this bull market still has anywhere from 8-12 more weeks left in a fairly consistent upward move. And even though I think the chances of an exact parallel are very slim, just suppose it would “exactly” follow that prior model. Remember, I’m just supposing, so don’t put this in anywhere close to concrete, but while I am fantasizing, let me continue through to see what would happen in this year’s follow-up.

That peak in upward “momentum,” (not the peak in the market, just the peak in momentum) would occur sometime between August 15 and September 15 of this year. The market would then enter a 9-month transition, producing a much more volatile period, but the Dow would remain above its 200-day moving average until finally making a peak out there at the end of that transition. That peak out there in the following 9 months would be only marginally higher (about 5%) in nominal terms than at this peak in upward momentum that I expect in the next 8-12 weeks.

And then it would be time to burst the bullish balloon once again—the final wringing out of the excesses in which the NASDAQ and S&P 500 indices would come down to a logically valuation. "

-- posted by ourisman

Top 64. Jun 12, 2001 6:08 PM

» burkmorz - Re: burkmorz

In response to message posted by ourisman:

Thanks, Ourisman....do keep us...uh..posted!!

-- posted by burkmorz

Top 65. Jun 13, 2001 7:22 AM

» ourisman - from today's comments

"If you are a chart reader, you were washed out yesterday on most of your technology stocks. The indices themselves, interday fell to a lower low. Take a look at the S&P 500, the NASDAQ 100, and even the Wilshire 5000. I’m telling you, this interday lower-low was disconcerting, even to me. But I have so many other benchmarks that are so dependable that were telling me that this is a temporary deception. As I say, I do avidly look at the charts, but that downward penetration of the previous lows in those indices that are so heavily weighted in the “new era” technology stocks, was exactly what the doctor ordered. About one month ago, when the equity put/call ratio experienced a couple of days at a very low 39%, I had advised you in these letters that it wasn’t a bull-killing signal, but was a signal that the “wall of worry” had developed a few worrisome cracks that needed to be repaired. So we pruned our portfolio’s every so slightly, pruning back partial positions from a stock or two that had spiked up by over 50% in the last few months. In addition, that juncture was used to prune another few stocks that had totally failed to live up to our expectations.

But by May 31, those cracks had been at least partially repaired, and we chose the weakness of that time to replant those seeds that we had pruned back then. Of course, the stock market wasn’t through with us yet. It moved up almost immediately, but then had to experience one more bout in the torture chamber. It had to shake the tree one more time to see how tight we really were holding on in our bullish conviction.

Now look at the indicators. In the last two weeks, something happened that I would have never expected. In the last two weeks, the Arms index has exploded once again. No, it didn’t go back above 1.50, but the 10-day average did move above 1.38, and that was a testimonial to the intense panic selling that was being done. I interpret this clue as this. Those tech bulls had refused to accept the warnings from the reliable tech managements who have a history of telling it like it really is. No, I’m not talking about Intel or I.B.M., but those like the management of Sun Microsystems and Texas Instruments. They had been saying for the last six months that their business had hit a wall. But the “hope” was still prevalent by the tech bulls that it would come back “in the second half.” Those dismal projections had continued three months ago, but still the “tech bulls” refused to believe. And then when the market took off in April, and the tech stocks did bounce pretty good from those extreme low levels, their hope skyrocketed. After all, Europe was going to do better, and was insulated from the U.S. woes (yeah, right.) But the last two weeks evidently burst their balloon.

When the 10-day Arms index moves up above 1.30, it is measuring an unusual amount of panic. I don’t really use the daily Arms index as a reliable measure, unless it experiences a couple of days above 2.0, but I did note yesterday that at one point it was above 2.50, and that was in the midst of the real damage yesterday morning. In my opinion, the move above 1.30, in this instance was an extremely bullish confirmation that a significant buying juncture was at hand. But of course, the stock market wouldn’t make it so easy, so it has continued to try to shake us out of our bullish conviction.

Surely, you now believe in the Smart Money Index by now. I know; it is exasperating sometimes since it leads the market by so many days. It’s prediction of a new bear market tends to be 70-85 trading days early, and when the “dumb” money takes over in those last 70-85 days, it often blast the Dow Jones Industrial Average (and the NASDAQ in today’s world) straight up. Dumb money buys aggressively with wild abandon, and chases the market up as the Smart Money persistently bails out.

On the other side of this story, at the most recent bottom, the Smart Money Index started turning up the same exact time that our Asset Allocation model started turning bullish in late December of last year as short-term interest rates began to plunge. In truth, that was a bottom juncture for most stocks as the study of percentage of stocks above their 200-day moving average will confirm. But the camouflage was not quite ready to completely lift, and the panic sell-off in February and March of this year, really threw the “new era” boys and girls for a loop. ; Even with our very minimal technology weighting, and zero telecommunication weighting, we all saw our portfolio’s hit in that panic. But as that panic pushed the indices down, lo and behold, the Smart Money Index was moving up. For the first time since the fall of 1999, it was making persistent and dramatic higher highs.

Yes, it has done it again. Yesterday, did you notice? The market panicked in the first one hour (dumb emotional money, ala the “Maria” effect.) But then the last one hour (the least emotional time of the trading day) it made back most of the damage as the smart money moved in. Those “lower-low” stop losses had already been executed. Yesterday, 12 of the most active 15 stocks were down—a result of the panic selling.

I could go on and on. But I still feel very much in rhythm with this market, as the repaired psychological composite is looking much more able to withstand the next bullish leg. For instance, the equity put/call ratio moved up to 71%, and the overall put/call ratio moved to 87%. This is not an iron-clad guarantee that the “tree” won’t be shook a few more times in this pre-announcement period, but the odds are heavily, in my opinion, on the sides of the short-term (and long-term) bulls.

There are so many excellent topics to cover this morning, but I’ve run out of time. But suffice it to say to look at the weakening commodity prices, the t-bill rate making a lower low yesterday. It feels good, because the news is still pretty dismal. Remember, this is a bull market based on hope, and that hope will be a function of hoping that Greenspan can work his magic of manipulation once again. "

-- posted by ourisman

Top 66. Jun 13, 2001 7:41 AM

» JenL_2 - Re: from today's comments

In response to message posted by ourisman:

Thanks David - Nice to see Hays so bullish...

But as that panic pushed the indices down, lo and behold, the Smart Money Index was moving up. For the first time since the fall of 1999, it was making persistent and dramatic higher highs. Yes, it has done it again. Yesterday, did you notice? The market panicked in the first one hour (dumb emotional money, ala the “Maria” effect.) But then the last one hour (the least emotional time of the trading day) it made back most of the damage as the smart money moved in.

So do I have this right - according to Hays a bear market is when the "dumb money" buys and the "smart money" sells and a bull market is when the "dumb money" sells and the "smart money" buys?

......Jen

-- posted by JenL_2

Top 67. Jun 13, 2001 7:41 AM

» Kirk - Re: from today's comments

In response to message posted by ourisman:

CBOE Put/Call Ratio Chart: http://stockcharts.com/def/servlet/SC.we...

TRIN above 2.5: http://stockcharts.com/def/servlet/SC.we...

-- posted by Kirk

Top 68. Jun 13, 2001 8:20 AM

» nomar - Telecom

David I read Hays has 0% telecom. Hmmm Tero Kuittinen
Southern exposure
6/13/01 11:00 AM ET
Telecom drama is continuing – Lucent got finally slammed into junk bond status. It’s having an impact – even after the recent stomach-churning plunge. There has been a lot of idle talk about the “break-up value” of Lucent being 12-15 bucks. Frankly – as long as bad news keep coming weekly, any break-up value is imaginary.

The latest grisly little party favour is the Brazilian operator Vesper. It was expected to amass 2-3 million subscribers by next year – little more than 500 000 had materialized by February. Lucent’s piece of Vesper debt is about half a billion. The operator has started cutting employees and selling assets - a weird move considering how hot the competition is in Brazil. Vesper is the showcase operator for developing country Wireless Local Loop projects. The problem with WLL is that it has never been shown to be competitive against mobile operators. Vesper was meant to be a key tests for the concept; the world’s largest deployment of WLL technology. Now the operator is selling property to meet monthly expenses.

There's good reason to expect a technical rebound for telecom stocks, but the news flow remains what it is, only more so.

-- posted by nomar