So what primary news did you listen to this week? Shutdown of the US government or the fact that Oil is now at the highest level in a very long time. Which one will affect the market long term? Oil ! I do not think you will see it immediate, but when the next earnings season starts in June, it’s going to happen. The markets will likely contract. This week I just do not think there was anything to drive the market over the hump of resistance that we are sitting on, but now that the budget stuff is somewhat solved, just maybe it will move next week. The real question now is in what direction. Like I have said in the past, no one can predict the future, so time will tell.
The chart to the left is the S&P500 weekly and what you want to look at here is the fact that the long term trend is up. The odds that prices stay with the trend or go higher are always greater than prices going down, so weekly we look very good. Price is also above the 10, 20, 40 week moving averages and all averages are pointing up, so that is another plus. The only negative that I see here is that on a weekly bases, more stocks were down than up based on the lower graph of the chart. Breaking $1344.07 overhead resistance would add fuel to fire, so getting through that would also help.
Next we review the daily chart of the S&P 500 and it gives us a little closer look at the action and action is what you will notice is missing. Basically we traded sideways to a little down for the week. Price is still above the 12, 20, 50 day moving averages, but if you look closely the 10 is flatting out which could indicate we are slowing. We also could not break and hold above resistance $1332.28. So just like last week, we need to break and hold above $1332.28 and then $1344.07 to really get things moving. We call this type of market churning and it is very irritating to a long term trader, which is what our retirement accounts are all about.
Last view of the S&P will be the 30 minute and it really shows how all the trading this week went sideways. The only day that had or showed any drama was Friday when toward the end of the trading day, selling took over for 30 minutes, then the last hour it recovered most of that. Something's that shows concern is that price closed below the 5 day and 10 day and the 5 day started to roll over. You can’t see volume on this chart but know that it was light, but what does that really mean?
So what do we take from all of this? Be cautious next week because even though the long term trend is up, the short term trend is coiling and it could jerk either way quickly. I will stay in the C and the S.
The I-fund daily is looking good. I see no reason why if your interested in investing here that you shouldn’t. the I-fund is approaching overhead resistance at $61.98 and if it blows through that, the sky is the only resistance left. We call that a vacuum.
Conclusion: Show caution in the C and S. Invest in I, Stay away from the F. The G is always safe and good.
TSP Distribution: C-fund – 50%, S-fund - 50%
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