Did you see that coming? Friday? Nope, no one could see that coming which goes back to me saying, “No one can predict the future”. What we can do is read charts and see when things and or sentiment is changing. You look at the chart below and see if you can see anything that indicates a slow down.
Well? Do you see anything?
There is not much I can add to the C and S fund status because the S&P500 and Small Cap indexes are giving no signs of weakness that I can see on the charts. Fridays big move up would make someone like me think that we may stall an consolidate next week or maybe even pull back to test to the beginning of that move Friday to see if buyers are still interested. The only other thing that might happen and it would not surprise me at all is a little profit taking. I sold to 2 stocks myself Friday into strength just to lock my profit and wait to see what those two stocks do in the future.
Bonds have still got me confused at the moment but my gut and what I see tells me to stay away from them for now. Bonds broke out to a new high this week and then it was totally rejected Wednesday and never recovered that price. Technically on the monthly, weekly, and daily charts you could argue that Bonds are still in an uptrend but since August 8, 2011 it has bounced off the $110 price several times. I just do not see the risk/reward to be in bonds. I would rather put my money in the G-fund or the L-income fund it I had to choose between the three.
I think time has come to talk about the European Index, EFA that tracks our I-fund. It appears to me on a daily chart we have made the turn and we have confirmed a new uptrend. The weekly chart is saying yes with caution because the 10 & 30 week moving average hasn’t crossed yet. Monthly is still really messy and only time will fix that. Let’s look at some charts.
In this first daily chart there are two primary things to note. First is that price crossed above the 50 day moving average and the 50 day moving average is rising. Second the major down trend line that has been in effect since May 5, 2011, has finally been broken. Breaking that downtrend line is the single largest indicator that stands out. The Money Flow indicator is showing a steep climb and how the I-fund compares to the S&P500 is starting to favor the EFA. All of these confirmation of the new trend.
Ok, this chart is going to look a little funky but it has a story to tell. First the uptrend support has been drawn off the pivot low’s and we need this to hold now and into the future. Prices the last few days have started to accelerate away from trend, which is good, but I expect it to slow down. See blue moving averages cross above the purple moving averages which is confirmation of an uptrend. The second part of these moving averages is for the purple moving average to align uphill and start to spread out. Do not concern yourself what they all mean, but think about like this. The Blue lines are the day traders and they move in and out of stocks fast. The purple are the long term traders that believe that price is cheap and they believe in the stock long term and buy as price continues up. So based on everything I see here, between 1/25/12 and present, these moving averages gave the buy signal.
Last chart I will discuss is the Weekly chart on the I-fund. I have found in my research that when price closes above the 10 & 30 week moving average and the trend line in the two Rate of Change Oscillator both close above the zero line, it is a excellent signal for buying long. The added bonus is the KST oscillator is crossed to the positive and turn up. So there are many things here confirming an entry into the I-fund. This has been a long work in progress so do not think for a moment that we are getting in at the bottom, because we are not. This new uptrend with all these signals have been brewing since 11/25/11. Another point to make is that I’m starting think that Investors are starting to think some of these companies in Europe that have been sold down or beat down, since 5/5/11, are now to cheap. This would explain why anyone would invest here with all the turmoil that Europe has experienced this past year. So risk is high here but indicators are screaming it is time. Use your gut with what you see and not what you hear on TV or the buddy that never shows you his profit and loss statement.
If we are by chance even or up Monday, I will take half of my C monies and spilt it into the I-fund. I will attempt to post my intentions by 11:30am Monday.
TSP Distribution: C-fund 50%, S-fund 50%
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