What can I say about the S&P 500 that hasn’t already been said this week and for that matter the past few weeks. How about I’m scared!! Ok not really scared, but I will admit to being totally clueless on what is going to happen next. Excited? You bet ya! I just can’t wait for it to break out or break down and do SOMETHING!
If you’re in the market long or short, or heavily invested in stocks in your retirement and have over $50,000 invested, be very, very, careful. If you think investing in the stock market is gambling, then next week you would be right. Most other times you are wrong, investing in the market is not and never will be as risky as gambling in Vegas.
TO MY CHARTS:
Starting with the S&P 500 weekly chart we missed the September run to date and the weekly is now telling us that we broken out of the down trend channel and the RSI is above 50. So by all indications, without looking at the daily, we are good to jump back in. But wait, there is that great big DOJI or Star looking thing on the last closing day of the week. That means we fought all week and no one won. Total indecision of the market. First Caution Number 1.
Jumping over to the daily, let me remind you of some details from the past daily charts that are still here. The red box is the battle ground that has been locked in place for 4 months. Those down trend lines at the bottom of the chart shows volume going down and prices going up, and then a very large pull back each time. This week we banged on 113 five straight days in row and no progress was made. Look back to July and June and you’ll see we have been here before. RSI is above 50 and most moving average appear to be turning up, but we can’t seem to get through 113. Caution Flag Number 2.
The only smart thing that I can see to do for now, is stand down and wait for the market to go one way or the other. If we break through 113, then I would expect a 70% chance that we will have about a 27% rise before stalling. I do not want to go into technical's, but these are the odds based on the past. If we collapse below 111 this week, then I would expect once again that we would rush down to the 104 area to test that support level. All I can tell you is that some of the best of the best traders out there are not betting on either direction and sitting mostly in cash.
By all indications, the Small Cap on the weekly is telling us to jump into the market now. Just like the S&P, it broke cleanly out of it’s down trend channel and price is above the 50 week ma. The RSI is above 50 and appears to be climbing.
The daily chart pretty much confirms the weekly and the RSI is the stand out here in that it is very strong and appears to rising. But just like the S&P, we appear to banging against a ceiling that it cannot break. Look and the daily chart and see the resistance and again at this point, it would be better just to wait and confirm.
The European index or EFA cleanly broke out of it’s down trend channel and price closed above the 50 week ma. The RSI is above 50 and climbing and appears to be strong. This appears to be the perfect entry, but looking at that last weekly price bar it looks like a star. Remember what I said about a DOJI on the S&P 500 above? Well it applies here also. Caution my friend is what it is saying because there is indecision this week.
The daily chart looks entirely different and it saying things that do not agree with the weekly chart. This normally is meant to be a warning because the daily chart is much faster than the weekly chart. Take a look at the daily, do you think that is resistance that we are banging on? The price seems to be rolling over as well as the RSI. I think there is just to much indecision to make a decision in this fund or index either.
Can you guess my conclusion? If you are all cash, wait. If your all in, well I hope your right because you got a 50 – 50 shot. Personally, I’m not much of a gambler, so I will be waiting for the market to tell me what to do.
TSP distribution: G-fund 100%
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