OK, first down week in all our funds and indexes in awhile. Things do not always go up and in time either have to go down or consolidate over time. Ever heard of a profit? Well, you are not the only trader or investor in the market either and or eventually people or companies are going to take a profit or head for the exits. So what I like to do is build bailout points that will never give to much back or bailout to soon in what should be a long term investment.
In the above chart it is a daily chart of the S&P, Small Cap, International index, Bonds, NASDAQ, and Dow30. You should know by now if your a TSP investor which index belongs to which fund, but just in case here they are. S&P = C-fund, $DWCPF (Small Cap) = S-fund, EFA (International)= I-fund, AGG = Bonds, and the NASDAQ and DOW 30 we just use to help us confirm where the overall market is headed.
We had a pullback this week and it was small. You can see that the 50 day moving average on every index is rising and price is above the 50 day moving average. This is what we want even though there will be times it is tested. Normally my first line of defense or warning is what I call the CBL line drawn in red and if price falls below that point, then we need to start considering the overall market conditions and make a decision to stay in or leave. Based on the above information, we are safe as of the close of the week. The only index that was threaten was the DOW30 and that is just an indicator for us. The S&P 500 also came close to firing a warning, closing right on top it's CBL thursday, but by Friday afternoon rallied to erase that threat.
Bonds. Normally I have a red line below the green but I left the red line on there this time to show the last exit warning and the the fall below the 50. This is a complete bailout signal for me and I'm not currently invested in Bonds. Now, we have a green re-entry line drawn and you can see that we are getting really close to having a buy signal. We are already have price above the 50 day ma, so a close above the green line would signal a re-entry. Next week we will be watching this closely. Two reasons, if this happens we should likely get back into bonds. Second, if that happens, there is a chance that stock prices will continue to fall. Not always, but likely.
So my conclusion is this, if your in the C, S, an I, stay there but they will have to watched closely next week consider the pullback we had this week. Bonds, if your in stay in, but if your out watch closey for a re-entry.
TSP Distribution: C-fund 50%, S-fund 40%, G-fund 10%
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