Another really, really tough week in the market. It is times like these that can make you pull your hair out and sometimes lose your nerve, but you got focus and look at the charts, avoid the clutter of news, and make a decision. I did that and still feel that I’m ok for now, but I’m not 100% confident that Thursday and Friday up days are going to hold next week. Why? Because of the news!! Did he just say news?
Ok let me explain this. I’m not naïve enough not know that news drives the markets. I also know in the Internet world where news travels at light speed, it can affect the market. News can have a good or bad affect on the market. I also know from experience if you trade the news ninety percent of the time you will lose because you are late. So I normally do not read or listen to any news prior to reading my charts daily to make my observations. Then once I make my decisions and voice an opinion, I travel to some of my favorite sites like Stock Twits 50, Alpha Trends, and Bloomberg to confirm I’m not to far off into left field. But I like making my own decisions on what I see, not what I hear.
So this past week at one point we gave all the gains for the year back. Then the last two days of the week, it did a little bounce. But the overall weekend was bad. Down another 1.92% on the S&P500 and the rest of the indexes followed suit. The MACD on the S&P really show strong weakness without any signs of recovery. About the only bright sign on the chart was that price closed above support of $1275. We did show a green trend reversal sign on the trend chart but it is really to soon to call. As I type this blog, you have to know that we are firing cruise missiles at Libya and that will likely be a negative on the market. But what I show next happened before the news and leads me to believe that the market is weak and may once again turn south.
The chart above is a zoomed look at the last 5 days in 10 minute intervals. We call this zooming in to see the actually trends close up. First thing that you will notice it that we appear to falling and the 5 and 10 day moving averages are falling. But the one thing that really caught my eye was Friday the segment on the chart. We had a big popup the first 10 minutes of the opening of the day and then the rest of the day, nothing but selling. This concerns me in the current environment. I would much rather see the 5 day moving average on top of the 10 and closing price above them both in this zoomed in view.
The last charts I will show are the AGG which represent the f-fund. The left chart is the daily movement and the right is the 10 minute chart as I showed with the S&P500. The daily chart is showing the last 2 days with red flags and this is worth noting and I will pay attention to it, but overall I believe we are ok here. RSI looks good and MACD is very strong and we also just broke a trend. The money was shopping stocks Thursday and Friday so the Bonds were not being bought. But with all the selling of stocks Friday, you will notice that last 10 minute bar in the bonds put it back above the 5 day ma. I put some notes on the 10 minute chart so I will not repeat them here, but I still like bonds at the moment.
Conclusion, if you in the C and S fully be careful and remember the line in the sand that is on the chart. Do not give anymore back then the gains for the year. If your straight G, your safe an may want to stay there I would not blame you. If you feel even a little brave, I would consider the F-fund in order to make a larger return. I currently like my mix, but if things turn sour next week I will bail to G in a heart beat.
Considering how rough the last two weeks have been, I consider myself lucky to still be holding a 4.02% gain on the year. Look far right bottom purple row.
For those that think that you can put your money in the L-funds and totally forget it, you might want to re-think that just a bit. I’ve learned over my last 20 years that nothing is perfect, but letting it run without at least watching the trends is not the right thing to do. Example, if you would have gotten in the L-2050 January 31, (that was the first opening day), until I called a pull out March 14th and then run straight to G or L-Income, you would still be sitting on a 4% gain instead of a .55% loss. That my friends is a 4.5% swing. The L funds are nothing but combinations of entire funds available as individual fund, C,S,I,F, an G. The most important thing I would emphasize to the young, is learn trends now even if you just use weekly charts and the 50 to 30 week MA’s. Do not wait until you are 20 years in like the rest of us did.
TSP Distribution: C-fund – 20%, S-fund - 20%, F-fund 60%
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