The last 3 days of the week saw all the indexes starting to rollover to what looks to be the pullback that I knew eventually was to come. As of Friday the S&P 500 lost 24 plus points and was down 2% and heading back below 1200 to settle in at $1199. What makes this such a hard read as to what to do with my retirement account and my personal stock trading account, is that I know the FED is going to be pumping money into the market everyday in November, the rest of the month. Someone did some research on FED days and days that the FED was not in the market and it is significant. The compounded return of all POMO days has been 14.18% vs. 2.27% for all non-POMO days! So what is one to do when you know all this data? Basically the same thing you would do with or without the news. If the market is trending up, we stay in and if the market is trending down, we bailout. Monday will likely be my final day in the market with my retirement account unless there is a big reversal in the markets prior to noon. We have had 3 warning flags in a row, the MACD has crossed negative, the RSI is almost at 50 heading south, and lastly, all other indexes agree.
The DOW 30 is by far the index that is screaming reversal and to pull your monies. 4 straight warnings in a row, the RSI is within 2 points of crossing over to negative, and the MACD has already crossed to negative.
The NASDAQ, which none of our funds directly track but can affect the overall market is also even more negative than the S&P. The RSI is closer to crossing to negative and the MACD has already crossed to negative. The NASDAQ has run further than the others, so it makes sense it might also fall faster. CISCO really got this index started on the nose over, so by next week this will be old news and maybe things will level off.
I saved the Small cap index for last because of all the indexes she is the healthiest. She gave a warning flag Wednesday, but that was cancelled with the market move on Thursday. Then on Friday, she printed another warning flag. The MACD has a cautious look, but hasn’t crossed over to negative yet. The RSI is falling but still has a bit to go before becoming a concern. So I guess you could argue that the Small Cap doesn’t agree with all the others, but that would be stretching it.
So in conclusion, if Monday starts out anything like Friday, then by noon I will at a minimum pull all C-funds and revert to G. Knowing me like I know me, I will pull all S-funds and revert them to G also. If I do pull out, I will have to wait until I get 2 green days in a row in order to get back into the market. I know what the FED did in the market all Summer and how they drove the market since September 1st, but unless I see the market going up, I will not ride her down.
TSP distribution: C-fund 35%, S-fund 35%, G-fund 30%
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