TSP Distribution: C-fund 50%, S-fund 25%, G-fund 25%
I have had a few ask me, “why is the sell signal now lower than the entry price?” I have a set of rules that I follow to take the emotion out of the market. It also takes the news out of the market unless you just insist on listening to it. That in itself is a problem and normally makes individuals make poor decisions. Ok look, look at the chart above and follow price to the far left. Do you see an entry signal on the chart? No you don’t because the last buy signal was November 28, 2012. So when the exit signal was fired June 21st, we were way above the entry. This worked perfectly. Nothing is perfect and we need those rules to protect profits and big losses. Sometimes the exit and entry will not be in our favor, like what is about to happen soon if price continues to rise. But what if it doesn’t? Then it worked and we wait. So, as long as you enter and exit with the signals, then you do not have to worry in most cases about finding an entry or an exit. Primary goal? Protect against major losses. Secondary goal, 7% gain a year if possible.
The S&P 500 above is still trying to breakout of the short term downtrend. Price did close above the 50 moving average and that is progress. The CBL and downtrend has not been broken, so I will not call an entry. We are looking for a close above $1652 and we will have an entry. I’m a very cautious person when it comes to my retirement account, so even if that happens, the next day we would need price to hold at or above $1652 by 11:45am before I would step back in. Technically, I never took my own exit because I was on vacation, but I will call the entry when it happens. Because I didn’t exit as I was suppose to, I drew a new exit that I will take if it fires again. That exit is $1598.
The International daily chart is still in the stay away from category. Lower lows, and lower high’s and the downtrend even though short, is screaming stay away. Price is also flirting with falling below the 200 day ma and if that happens, long term investors in the stock market will be looking to liquidate their positions.
Do you want to see something that is even worse than the International Daily chart? Take a look a bonds or the F-fund. Explain to me why anyone would invest here? I can only think of one reason and I do not play that game, Bottom fishing!!! It’s what we call in the stock market, “trying to catch a knife.” At least the G is stable and paying you a little money, bonds are taking your money.
Above is the Small Cap and or S-fund. This is a great indication that the markets might just be done correcting for the moment and getting ready to reverse. The Small Cap fired a Buy Signal Friday. Price closed above everything that is required to call it. Plus price closed above the last Pivot high which technically breaks the downtrend. So what do we do Monday? Just jump in blindly Monday without watching price? No we don’t. I will want to see price holding above $862 Monday and if it doesn’t, I wait. If price does follow through, then I will take my 25% G money and throw it at the S-fund.
So there you have it.
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