TSP Distribution: C-fund 50%, S-fund 40%, G-fund 10%
What a week for me and what a week for the markets. I was in Rome, Italy for the last 9 days and for the most part that was great. Then Ben Bernanke and his cronies decided to enact QE3 and the markets here and abroad took off. My personal return since the first of the year is at an all time high and it hasn’t always been fun to watch, but there it is. Now, here is the hardest part of the markets. Can we expect this market to continue to go up? Is everyone rushing into the markets now because they fear they missed the move? Greed? Do we stay in the market and milk it for all it’s worth and risk being to greedy? When is the best time to bailout? If you could answer all these question and get them right every single time, you would not be reading my post. This is the part of the story that I have been preaching and trying to teach to a few for a long time. Shut off the news and let the price action of the charts tell you what to do. It takes the emotion out of the equation and well help in the decision. Use a set of rules on those charts and let it come to you. Just remember, we will never get in at the bottom, never get out at the top, but we will get the meat out of the middle. So if you understand that then you will understand and accept, like me, that even though I’m at the high of the year in my return, I will eventually have to give some back when the markets do reverse. Accepting that, makes staying in now easier to understand. Ok, let’s look at those charts.
August 31st, I wrote about the grey box and how we were churning and we needed to watch for a break either way. Since then we broke to the upside. So do I see reason to bail? Nope, we a rising 50 day moving average, we have a uptrend line drawn and price is above that line. Notice that our first warning CBL line has been moved up following price to $1428. In August 31st last report is it was around $1395. So there is no reason to bail and I will continue to ride the wave until PRICE tells me to get out.
Now that I’ve shown you what the markings mean on the S&P 500 chart, the Small Cap should be a really easy read. There is nothing here to say other than, we have to ride this wave until Price tells us to get out. Everything is perfect, so we ride.
The International also jumped and like the last two charts, this is a go. I missed this move, so Monday if we are up or sideways, I will once again look to move my last 10% of safe money into the I-fund.
Bonds look to me a unsafe bet in the market right now. If your bottom fishing, you are a better person than me and I think you need to go back up and read the first paragraph. We are below the CBL and both 50 day moving averages, so why be invested in bonds? This is what we want the other 3 charts to look like when we decided to bailout of the C,S, and I. Right now they say stay invested and bonds say no. Didn’t need a news article to tell me this now did we?
Conclusion: Do I need to repeat all the above? If your in the C,S, and I, stay there until we reason not to be. Bonds, run! Read price, it doesn’t lie.
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