Above is the S&P 500 daily chart. This week, the first week of 2013, we re-captured the high’s from September 2012. We are not at all time high’s but we are closing in on the all time closing high of 1565. Someone asked me at work this week at what level do I think things will reverse and I answered him way to quick saying that I was a trend trader and do care about levels. That is a correct statement but I do actually know where that level will be reached and it will be reached when all the sellers come rushing in to take profits. Yes, it is that simple. If you were looking for a number, you’re a fool because no one can predict when that is or what’s the actual level. I will play my trend and stay in but I do have concerns. We are overbought and a pullback is expected or at least a little sideways movement. The key word is expected! Price can still go higher, so it just good to know that in case you are chasing price. The CBL, which I use for my warning system to bailout is still set at 1411 but I expect that to move up next week. If I were outside looking in on the current market levels, I might just stay out and wait for a pullback. When your bouncing around high’s and then you add in the fact that the S&P was up 4.57% last week, it just makes me think someone is going to take profits.
The weekly chart above of the S&P 500 is on track and looking good. It has been a long time since the last buy signal was giving and it only saying buy.
The Small Cap Daily above is making all time highs and I’m only concerned because we are overbought and bouncing clearly outside those lines. We could get some sideways or a pullback very soon based on that alone. CBL level is safe. I’m staying in but I might hesitate getting in Monday at these levels. Just be aware. I’m not going to show it because it looks just like the S&P, but the weekly Small Cap chart looks just as awesome as the S&P.
I think the main thing to take away from the International Fund above is the fact that a pullback is likely. We will get early warnings here when that dotted accelerated up trend line is broken. We will also see the break of the CBL before that the moving averages are even touched. So we should get a good early warning here when and if it happens. Price can continue up for a long time before it rolls over, but the good thing about charting, would should the reversal and it should not catch us off guard. I will stay invested here with 20% of my funds. The Weekly chart is picture perfect uptrend.
Above is our Bond fund, (F-fund), and even though we/you should be out of them since 12/3/2012, it is looking even more critical now. Price had fallen below the 200 day moving average and a lot of traders consider this a significant bear signal. This could last a long time and if you look at the daily above, you will see it is looking very familiar to 2 years ago. Those that need to be concerned here are those that are in Bonds for safety and the L-income fund, and the L-2020. The rest of the L-funds have 7% or less of their assets in Bonds, so it will not have that much affect on price. We want to keep this on are radar and look for a reversal in the next month or so down the road. I have zero funds in bonds.
When a weekly chart crossover for a sell, you better bail because it takes a long time for a weekly to reverse. To say it once more, I would not be invest in bonds for a month or two until price on the dailies reverse.
Conclusion: I will stay in the market and stay 100% invested in stocks. My TSP account is at the highest levels as of the close Friday than it has ever been in my career. I still feel I have a lot of work to do here, so vigilances is highly required. As of the close Friday, I am concern that the S&P and Small Cap are overbought and banging on all time highs. A pullback here would no surprise at all and to me, it is expected. Do I have to say anything about bonds? So, we will watch our CBL’s and trend lines and see what happens next week and I hope most of ya’ll got to ride these prices to these levels. For the long term investors, the weekly charts look awesome and they say stay in. You can look below at the last post and click the weekly buttons to see your charts.
Have a great weekend
TSP Distribution: S-fund 40%, C-fund 40%, I-fund 20%
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