So Friday we finally saw a little selling in the market and if you didn’t expect it sooner or later you are living in a dream world. This is and was are first negative week of the year for every index. That is pretty amazing in itself. Look at the chart above and then glance down the Year to Date numbers and you will see that it has been a good year so far. Now double most of those numbers and that is what we have run since the October lows. Nothing goes straight up for long without coming down because someone somewhere is going to take a profit. So is it a turn in the markets? Are we going to start down for months on end again? Who knows, but after I show you the weekly charts below, you will see we are in an uptrend and will be in an uptrend until some of the indicators are broken.
First up is the weekly Chart for the S&P500 or C-Fund and you will see that the down day Friday didn’t change anything on this chart. I mean looking at this chart you could almost argue that last weeks bar moved to much to the upside, but that is another point. We just completed the 7th week since the long term cross over to the upside, so it is going to take some major down side pressure to reverse this momentum up. We are also above the Green trend line and all of the Rate of Change oscillators are positive. There is just too much saying, “way to soon to make a call.”
I only show the daily chart to help show support levels that we would like to hold. The first of course the $1333 level, which also coincides with the green uptrend line. The next level you have to call is the 50 day moving average which is $1290 today but it will continue to move uphill each trading day. I would like closing prices to hold that at a minimum and if it doesn’t, I will be looking to bail to safety. I really want to use the weekly chart to make my calls because it weeds out the noise, but I also have to be aware of the fast moving daily to give me a heads up. The other indicator like I mentioned in the past is my stock portfolio. When my positions start to get closed out in rapid fashion, it sets off all my alarms. Friday I got popped out of two, but one had nothing to do with the down day and all to do with the CEO stepping down. So no alarms yet.
The International index or I-fund was looking good for entry this week and I took the bait. I still feel ok here but there was a little damage done. Looking at the weekly chart first you will see that 10 and 30 week moving average never crossed to give an official buy, so you could argue I got in a little early. But seeing the price is the most important thing, I did make that decision based on price and rateofchange oscillator. The weekly chart still looks good to me and all those buy signals from last weekend are still there this weekend.
The daily chart on the I-fund is where you can see the damage. There is a primary uptrend that was drawn in the beginning and then a second trend drawn that was accelerated. It would have been really hard to maintain, but we draw them to give us warning signs of reversal. So if you open the chart, you will the second was breached. This is not a disaster and what we need to happen is for levels to hold. The main thing is that price continues to close above the 50 day moving average. The next bonus is for price to stay above $52.50. I didn’t draw that line, but it is important to hold above those points. The 50 day is below the $52.50 but the moving average is upward moving so it will not be long before it gets to that point. Something to watch and be aware of.
Ok, none of our funds are directly invested in the Dow Transportation indexes, but I watch these as part of my market sentiment. What I want you to see is that maybe some part of the market is starting to reverse and if it spreads, our funds could get involved. The chart below to the left is the daily and the first thing to see is the last 5 or so days, price is falling and creating a Bull Flag. normally when price breaks out of this flag it goes up. So this is a goof thing, eventually. The negative is that price is starting to breach the green uptrend line and we never want to see this. Also, just like the other indexes, we want price to stay above that 50 day ma. The only other thing I want to show you is the same index with oscillators in light blue that show day traders and purple that are investors. It looks like the day traders are cashing in profits and right now the investors are hanging in there. Next week will be the proof in the pudding and we will see how those investors hold up.
So in conclusion I think next week could help us decide whether once again buyers comeback to the rescue and buy on dips of the market. There are a lot of investors talking they are looking for a pull back just so they can get in. So we could easily have a very small pull back followed by another push up in prices and we could also have profit taking considering the lows of October to now is equal to 22%. Wouldn’t you take a 22% profit if you could take it after a year like last year?
I will hold steady and wait for more conviction in direction in the weeks that follow.
TSP Distribution: C-fund 25%, I-fund 25%, S-fund 50%
No comments:
Post a Comment