TSP Distribution: C-fund 50%, S-fund 40%, G-fund 10%
This week was basically a non event in that we were slightly down and price overall movement was sideways. We calls this churning or consolidation of price. I will talk about that later, but the month of August turned out to be a good month for us with a gain across the board except for bonds which were barely down. Weekly, this made the second week in a row where most indexes were down. I still believe we are safe at the moment, but in time we are going to have to make new highs and I will show that below.
To the left is a chart of the S&P500 and the first thing I want to point out is the fact that we once again bounced down off the $1420 to $1422 area and retreated. We are tracking sideways which is not a bad thing if you look below this current point and see how far up the chain we have risen. So, we could be just consolidating here or the buyers that got in the last time we were here in April and May, could be selling out just happy to get most of their money back. The Gray box represents this consolidation area. Now let’s go back to April 9th and there I marked the failure of the CBL and Trendline on the same day. now compare that to todays close at the far right of the chart and you will see that we are pretty safe and in good shape overall. If I scroll my mouse to the far right were the CBL and trendline meet in the future, we need prices to start going up prior to September 17th. So we have time and we just need price to stay above the Red CBL line. That is the first warning line and if we close below, I would be afraid that another pullback would be in order. So we have Consolidation, we have critical support of the CBL of $1397, support of the Trendline, and then overhead resistance at $1420 to $1422. This means we can only watch and wait before we know anything. Do nothing is in order.
When you open this chart it represents the percentage of stocks in the S&P100 that are above their 150 day moving average. If more than 65% are above the 150 we are consider to be in a very strong bull market. In between 50 and 65 still consider bull but it could be wavering or turning in either direction. Below 50% is of course considered a bear market. We had an uptick the last day of the week but you could argue that we slowing down. The overall trend to me still appears to up, so I lean to the bulls.
Above is the Small Cap and we are above the 50 day moving averages, in an uptrend, and consolidating above the CBL. So there really isn’t much to say here but do nothing and watch.
Above I want to show a missed signal that I didn’t report throughout the week but I did say that it was something to watch last weekend. Tuesday, bonds broke above the buy line in the CBL . Wednesday prices fell so you had to ignore that signal. But by mid-day Thursday it was back on and we should have entered. Friday bonds blasted off and closed at the high for the day. I’m not going to cry about the miss entry because I can enter next Tuesday without missing much. The other thing to note that if bonds are going rise again, does this mean stocks are going to nose over? It is possible and it is something we have to watch. I doubt very seriously that I will take my 10% G- money and throw it at bonds but we will see what happens next week.
Last chart above is the International Index and Thursday we actually got a warning to sell. As of the close Friday that signal was negated. Price is still above the 50 day moving averages and the CBL. Even though it was very, very close creating a higher pivot low Friday, it just didn’t quite do it. This index is on watch.
So my conclusion goes like this for the retirement account. If you’re in the C and S, stay in and watch those support and resistance levels next week. I would not enter any of our current funds if I were out looking in. Wait for prices to start rising. The International Index and or I-fund is definitely a watch and do not enter as of Friday. Bonds, is the only index that if your are purely watching the charts is saying get in. I see little risk or reward in Bonds, so that is totally up to the buyer here. I’m happy just leaving my 10% in the G or treasuries at no risk. I will continue to be 50% S&P500 or C and 40% Small Cap or S. Just sit back and watch the churn and we will eventually be given direction based on price action, not news.
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