Yep that’s right, Friday closed the month of June, the 2nd Quarter of the year, so we are half way through and we are not doing to bad.
After this past Friday’s huge 2.5% to 2.8% move in the S&P and Small Cap, I came away almost feeling like I got saved more than this was the beginning of a new trend. This is because the week earlier I took my signals and got back into the market only to see it collapse. I did set bailout points and I did bailout of the International index, but the I stayed in because the other two indexes tested the CBL line or bailout line but never closed below it on the S&P and only one day on the Small Cap. Yes, I was very close to bailing out of the Small Cap but it bounced off the CBL and moved up for two consecutive days before the big Friday up move. So what do the charts say now and is there any indication that we may keep moving up? Remember, I do not make forecast of the future, I only read what has happened and try and guess like everyone else where it might go based on what we see.
First up is the all important S&P 500 which is our C-fund. The most important item on the chart is the fact that the 50 ma or light blue line was recaptured and we closed above. It is really important that we close above it more than just trade during the day above it and end up closing below it. Each day you close above it means that price has to be going up. The second most important item on the current chart is that we must close above the last highest high at $1363.46 and stay above it to show strength. Normally after such a large move on a single day we expect some profit taking by the bigs in the market, so a down day Monday would not surprise me. After that though, I would expect the markets to start churning higher to take out that $1363 resistance. Other things to note on this chart is that we did created a high lower low, which I did not mark, but I did create a slower green dotted uptrend line to warn us that things are falling apart if it closes below this line. Lastly, my entry and exits are still currently on the chart. The solid horizontal green line is the line that price closed above and I entered where the “E” is marked on the chart. The solid Red line is the bailout line and if price continues to move up will eventually become mute. We will have to adjust to our charts once this happens.
The Small Cap is in the same basic condition as the S&P 500 which helps me confirm that most stocks are moving higher. We want the indexes to agree even though some move faster or slower, it is always better if they agree. The only difference to note here is that the Small Cap did takeout the last latest high. I thinks this speak volumes and hopefully follow through to the upside will continue.
That leaves us with the International index and unlike the other two, we are in the watch mode here. This index broke down hard last Monday and Tuesday and I bailed out. I only had 10% of my funds here so not much damage was done. This index did recapture that 50 day ma but based on the entry system that I use, I cannot give this index another look until it closes above $50.83. It’s unfortunate that I got bounced out but rules are there to protect my monies, profit, and save it for a better day on the market. Sometimes you will take a loss. It is part of the process.
Conclusion, if your on the sidelines with the C and S, I would personally wait until the day we close up the S&P $1363.46 and then get in the day after as long as it not in a free fall. I would enter on a flat or up day and maybe even a slightly lower day, but not a day of more than half percent lower or more. The International fund? I’m in the wait mode here so waiting is my recommendation.
Last Notes:
This past week gave me my highest closed week of the year, so I’m happy. My high for the year was 13% but I never really closed that position by pulling out, so my high is the current Friday’s close of 10.36%. Much better than last year but Summer drama is still here, so nothing will surprise me from this point to mid-October. Things that concern me is that the Small Cap is wiggling back and forth with on the moving averages and they are just not positive or negative. It what I call wishy washy. The International weekly is just butt ugly but showing some signs that it might flatten or turn up soon. The S&P never crossed over to the downside and never came close to merging, so it is stronger than the rest. After last week the S&P weekly chart actually is starting to turn up. So I have a few concerns that the long term over trend is not confirmed up yet. That will take at least 2 to 3 weeks up upside movement to resolve.
Finally, the European banking thing is always there and will be for at least 2 or 3 more years. Yes, years.
TSP Distribution: C-fund 50%, S-fund 40%, G-fund 10%
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