I spent a lot of time Thursday, Friday, and Saturday trying to find a reason to bailout of the Stock Market. Why would I want to do that? Well after the shell shock of last year being up until May, fighting to hang-on to that gain, then giving it back in a 3 week period, I think that is one good reason. Then another good reason is the fact that we have had 21 trading days or 4 weeks, without a pullback of any kind. That makes me nervous. So getting back to the point, why? I look at my charts and try to find just a little hint of anything that might give me reason to pause. Compare the Weekly charts to the Daily and then indexes to other oscillators and I come up with nothing. As a matter of fact, we finally got another reason to stay in when you look at the bonds. They finally started to give way and show signs that a pullback is emanate from the long uptrend run that began 4/12/11 last year might be ending. I will have more on that in a moment. All I can tell you is this, if you are looking for me to call the top before a pullback, it’s not going to happen. Once the S&P500 and Small Cap start to nose over, I will shout as loud as I can, but till then, I gotta let it roll.
So here we go. Are you in the Bond fund? Well if your in the 2020-2050 funds, F-fund, or Income fund then you are invested in Bonds. First let’s look at the weekly chart to see if we have any warnings. 
I want your eyes to go to the blue box I drew on the chart and notice that we had 4 straight days of selling and the last day, Friday, was the worst. Cutting through those 4 selling days is a gray line that once crossed is a sell signal. Then the most important signal comes from that green uptrend line being violated to the downside. Lastly is every oscillator on the chart is singing sell. I know if this was a stock, I would either sell it, I would not buy it, or I would tighten my stop loss order to make sure that I will not give away to much profit. So putting the two charts together, I would be leaning very hard on bailing out of bonds at this point in time. I see no reward at this present time since price can’t seem to bust through $110 and the last 4 days of selling just seems to screaming get out. I guess one more week of riding this if your in is not bad, but if bonds slip again Monday, I think I would bail.
The S&P 500 weekly chart to the left that there is nothing in this chart you do not want to see. Everything is singing stay in the market and or C fund. This is another reason that if I was in the Bond fund or in Bonds, I would looking for the exit. You will also notice on the weekly two more things. First the last long term downtrend line is under attack and if the current holds, we should break and clear that next week or next. Also that big Green an Red Box on the chart represents when the weekly chart says you should be out of the market. The current time frame is black and when the index indicates we should get out of the C-fund, I will color it green. So that means you should be in currently.
Like the S&P 500, the Small Cap index is a thing of beauty at this moment in time. There is nothing not to like. This week, price broke through resistance and Thursday and Friday completely cleared it. The other thing to note here is that volume actually increased with price increasing and that is always perk and a confirmation that this move might be the real thing. When I said I was looking for a reason to get out of the market, I was looking here also and I can find nothing. The Weekly chart is not shown here because it tells nothing new.
Wow, what a week the I-fund and or European Index had this week. This fund jumped 4.7% in one week and over took all the gains of the C-fund has made for the month of January. Do we buy here? If you’re a gambler yes, or you can just do as others do and say you are invested here even though your not. First looking at the Weekly chart to the left you will see that things are turning. We now have 3 pivot lows that are higher and will act as support for this beginning trend. You can also see that long term downtrend that has been running since May 2, 2011 is still in charge and even though it is being approached, has not been broken. Currently we are still 18.5% below that May 2nd high. So we have time to wait. The CMO & KST oscillators on the weekly are looking good and with those taken at face value indicate we should be buying here. The Stochastic on the other hand is un-decided and looks a little wishy washy. Before I would commit with this chart, price trend would have to be broken and then confirmed in an uptrend. Also the 10 and 30 moving averages should cross and they have not.
Now that we have all that information on the Weekly I-fund, let’s look at the daily to see if we should maybe take a early entry. I’m a price type person and price in the end is the only thing that pays you money. First thing of very importance is the higher pivot low’s which will confirm the new uptrend. If there is anything on this chart you cannot do without it is higher pivot’s. Price is sitting just underneath that primary downtrend, so at this point, why not just wait and see what happens. If we have higher prices, it would be nice to have higher volume to go with it and if you look on the chart below the pricing, you can see volume increasing. Now the indicators and oscillators are also starting to turn into favor. The most import being the 10 day ma crossed over the 30 and fired a buy signal. All the oscillators are firing buys, so we are good to go. I just believe another few days and we will have our answer without guessing and then everything will be stacked in our favor. Remember this would still be consider an early entry because the weekly has not done the 10-30 crossover yet. Lastly, I feel there will be a short battle here between $51.33 and $52.33 that extends back to October 12th. I didn’t mark it on the chart but if you look at that price range there is a lot of trading taking place there. So clearing that $52.33 level would also help confirm an entry.
So my conclusion for this week is pretty clear, bailout of Bonds, stay in the C and S, and be looking for a entry into the I soon. How much longer will this run? You tell me since your looking at the same thing as me. It will last until the charts turn down.
TSP Distribution: C-fund 50%, S-fund 50%
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