Damn, what a difference a week can make in the market. It pains me to say how much I donated this week in my retirement account, but I have been here before so I will just keep working at it and if I have to pull, I will pull my money back out and wait for another entry.
When things look the worst, sometimes they just come snapping back in a heart beat, so let’s look at the damage done this week and what it could mean for next week.
The weekly chart on the left was never officially out of a down trend, but it was a work in progress. We broke out and were awaiting a higher pivot low to be created above the down trend line. We are still waiting and if you at it with those eyes, we are looking good. The small problem is that we closed below the 50 week ma, which is never good, but we are still straddling the 50 week ma with the trading bar. Next week it will be a week to watch, because if the trading bar falls completely below 50 week ma, then we would have to pull out of the C-fund. Take a close look at the trading bar for the week, it created what we call a Doji ! Why is this important? Well instead of me telling you, I will provide a video link to watch at the end of the S&P500 write up.
The Daily chart on the SPY is bad, bad, bad. Did I say it was bad? We started out the week shaky but climbing for the first three days. Then came Thursday and the unemployment report and the bottom fell out. I really thought we were going to fall through the 50% retracement, but it held. Then Friday we actually traded below the 50% retracement but the last 1.5 hours of the day, we came crawling back out of hell. It was a nice hold for the bulls. What it left us with is a possible new down trend on the daily chart and if we get another lower pivot high, then it will be official. Some will call it now, but I disagree. So is there anything good here or to make us hold the line for another week? Yes, the last trading day of the weekly and on the daily, created a Doji. So we have a Doji on the Weekly and the Daily in what appears to be a down trend and that is rare. We have a good chance that we will get a snap back to the positive. Click the link below and watch the description for a Doji in a trend and you will see what I mean. Just remember, that it has to be confirmed with an up day Monday in order for it to mean anything.
In the past, the small caps were always are strongest index, but how times have turned. It is looking more and more as if this index is going to go south. On the Weekly chart the trading bar straddled the 50 week ma again and the RSI fell below 50. There is a chance that next week we could move back up and create a higher pivot low, but this might just be hopeful thinking. Looking at the daily chart, it basically confirms what is going on with the weekly and that is we appear to heading south. It is still to early to call, but I will tell you that the Daily and the weekly really needs to hold above $516.74. If we penetrate that, and we could be heading to $500 or another 3 to 4 % lower.
The European index chart for the weekly is just barley hanging onto the 50 week ma and I believe for sure next I will be bailing on this fund. Very disappointing. The only positive that I see here is on the weekly chart. There is a possibility that we are just setting up to build a higher pivot low above the last breakout and that would be fantastic. It needs to start that process next week with some up days. If it continues south, I feel it will just lead to more down days.
Not a very rosy picture and I think this week really caught a lot of traders off guard. There is so much negative news on all fronts with the exception of the bottom line of most companies reporting earnings. Let’s hope that are Doji’s on the S&P follow through, but if not be prepared to bail.
TSP distribution: S-fund 40%, C-Fund – 40%, I-fund – 20%
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