TSP Distribution: C-fund 50%, S-fund 25%, I-fund 25%
Well this week wasn’t as big as last week but a good week it was. The Small Cap is rocking with another 2% gain this week to add to the 2% we earned last week. My personal setup that you can see above had a gain of 1.18%. Year to date and Monthly numbers for May are pretty incredible considering we are not even half way through the year. Every index that I’m tracking above has returned double digit gains with the exception of Bonds. I did warn that if the stock market started to accelerate that Bonds would likely suffer, and this week a sell signal was confirmed Tuesday. More about that below. I’m doing my very best to keep my little nose and ears away from the news because I just know what they are talking about, an emanate pullback, overbought, economy, budgets, or something that is going to make this market crash. To me this is mind numbing and I hear peeps at work talking about how the markets should be tanking based on news and numbers. I do my best to tune that out also.
Let me give you my point of view. If I have my money in the stock market and it is going up, and I’m making money, do I care why? No, it is paying me money and it’s legal. If you are going to tell me to get out of the market while it is going up because our economy sucks? Do you think I’m going to listen to you? No. If the market is going down and I take my money out of the stock market and put in the safety of T-bills, (G-fund), do you think I care why? Nope! If I made 11.87% so far this year, see My Returns above, and I give back 10% of it in a month, did I make more than the G so far? Yep! Bluntly, I really do not care why as long as I’m on the right side of trend. I’ll let those that must worry about the why’s, worry about it. I got burned twice, once in 2000 and again in 2008, now I babysit price not news!
I was a little surprised to see Bonds fire warnings this week, eventually a sell, and then a confirmed sell signal. It was just 11 or so trading days that price crossed above the 200 day moving average, so I really thought it was going to do a slow grind higher. I did make the comment a few times in the past that if stocks continued to rally that Bonds could take a hit. The current condition of bonds is stay out. Price is below the 50 day moving average and the 50 ma is falling. I would also expect bonds to find support next week around $110, but that would not be a buy. So at this point of time, if your in bonds or the L-income fund, the return possibilities look a little grim based on trend.
Above is the S&P 500 and to the far left on the chart is January 1 and the far right is today. What a thing of beauty! Thursday of this week we hit an all time trading high and on Friday an all time closing high. Closing price is the most important thing. First warning level on the S&P would be our CBL at $1598. The up trend line and 50 day ma are perfectly lined up, so the next two warnings and sell signals would happen in rapid fire. That level is $1570 as of the close Friday.
Remember this post? Who knows if price will actually go straight to that point and then reverse but at this moment in time the measured move appears to be holding water. If and only if we do reach that point, at that price you should expect a consolidation or a selloff because everyone else in the market will know about this measure move. Let me clarify that, trend traders not newscasters will know this fact. No current warnings in sight on the S&P500, so ride the trend.
Since the head fake sell signal on April 18th price did recover all the losses plus some. Since the last entry signal that I was really nervous about taking, the Small Cap has risen another 3.3%. This week the Small Cap was up every day and into the close Friday it drove in strong and closed at an all time high. Speaking off that head fake sell, this is why using daily charts is a little more difficult to understand and play. If I, we, or you had been using the Weekly chart method where you sell when the 10 week ma crosses below the 30 week ma, you would have never sold. So you would be one step ahead of me. At this point in time there is nothing to do but ride the trend until we start to get warnings.
The International index just did pull off a gain this week @ .22%. We also made a higher pivot high which is good and bad at the same time. Anytime we create a pivot high we know that price is normally go down for an average of 5 to 10 trading days before it is suppose stop and reverse. That is all technical theory and not cold hard facts. The main thing I do is watch for warnings that the pullback goes to far and starts firing warnings. The first level is going to be the CBL @ $61.36. Hoping things do not go that far. Here is the good part, if your looking for an entry in this index wait for the next pivot low. It needs to be formed prior to breaking the CBL otherwise it will be a lower pivot low which means a possible new downtrend. I know, to much information. Let’s just see how it plays out and if I remember, I will call the re-entry.
So there you have it. Continue to ride all the indexes except bonds and let’s see how much further this uptrend is going to drive. Turn off the news and watch price and you’ll be a much calmer trader.
Have a great weekend.
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