This week we had a shorten week of trading and going into Friday morning I thought we might pull out a gain for the week but it was not to be as we were down 1.24% in the S&P500. So where are we? To me it looks like we are the midst of a Bull Flag and what you would expect to happen is eventually we breakout and continue up. The last 6 trading days have stayed in a range of 1178 – 1200, the 8-21 day ma’s have merged into a straight line, RSI is just below 50, and the MACD is falling. Something is going to bust loose soon and the odds are more in favor for an up swing than a down swing, but no one can see the future, so we just proceed with caution. The Weekly chart,(right), on the S&P 500 is throwing out some caution flags as we have three red flags in a row. The RSI is still strong which leads us to think we still have buyers in the market, but another concern is the advance decline line appears to be falling. We are above the 30 week ma at this time, but that gap is closing. Another thing that could affect this market is the news in Europe with Portugal and Spain might also need a bailout in the banking industry. Like I have said, we proceed with caution and do what the market says and we do not listen to the news. The market is always right.
The small cap and the Nasdaq indexes are in pretty good shape with nothing major to add as far as how it compares to the S&P500. The Small cap by far looks the strongest of the indexes and could be a leading indicator of the overall market. What has to be said though is the European index is still negative and showing no signs of recovery. With all the bailout banking news between Ireland, Portugal, and Spain there is going to be downward pressure in this index until they get it all worked out. When it bounces, it will likely bounce hard up.
TSP distribution: G-fund 20%, C-fund 40%, S-fund 40%
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