Another week on the market and we made some nice moves in the weekly charts that would make you think it is time to jump back in the water for another run. But if you dig just a little and take look closer at the daily charts, the dailies are saying you might want to wait a bit more.
So let’s get started with the two charts above. The weekly chart of the S&P500 made full bar move above the 50 week ma and the down trend line. The RSI is also above 50 which confirms the strength, but it was moving sideways. We would like to see it climbing as well. Now look 7 weeks back and you will see that we have been here before and we got a head fake.
So now take a look at the chart on the right which is the daily chart. We actually did nothing for the 5 day trading period and if anything closed a bit down. The Bulls and Bears tugged back and forth all week and no one could really claim victory. This could mean that the buyers/bulls are drying up and we have hit resistance. We might just be at a pause. Either way, what we would like to see next week is higher pivot low to confirm that weekly chart entry. If you have a betting personality, the weekly chart meets all the rules, but my gut tells me to wait a bit more for the daily to follow suit.
The Small Cap or $DWCPF index completely cleared the 50 ma on the weekly chart and you would think once again this would good news. The RSI is above 50, but moving sideways. Since I never exited the S-Fund this is all good news for me, but if I was standing outside looking in, I would once again have to take a closer look at the daily to see if I would enter.
The Daily chart is almost identical with the S&P 500 in that you cannot tell if the Bulls or Bears won the week. What it does tell you though is that we are waiting for a higher pivot low to confirm a down trend reversal that would make entering the Small cap index easier to call. The RSI is above 50, the current trading price is above the down trend line, but we are trailing off. Looking at the bright side, we need the market to pull back a bit in order to create that pivot, so hopefully next week we will get that signal.
The European index or EFA, finally made back to the 50 week ma and for the first time since the end of April, the RSI crossed above 50. All of this is great for the I-fund but it to is not enough for me to throw any money it’s way. We need to clear the 50 week ma and be above 50 on the the RSI. It also would be nice to see that the daily chart agrees with the weekly and right now, it does not completely.
So just like the S&P500 and $DWCPF, the EFA needs a higher pivot low to confirm entry. So even though we have a lot of good to look at, I would be very cautious based on the daily charts and the market itself since May 6th. So for now, I stay with my current setup and I will only enter in to stock positions that give me the confirmation that I’m looking for. I did enter a new stock position today and I will post that next.
TSP distribution: F-fund – 50%, S-fund 30%, G-fund 20%
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