There is a lot of red on the weekly numbers above but overall the week was not all that bad. Just remember, prices cannot go up every single day, week, or month. Eventually the players in the market are going to take profits in stocks but they also will take their profits and eventually put that money back to work. We call this period consolidation and as long as prices stay in an orderly pullback and do not break certain levels, it is considered healthy. I believe that we are currently in that mode and time is approaching where it is going to break in one direction or the other soon. The last 3 years in the stock market if you missed November through March, you missed most of the gain for the year. So I think we should position ourselves to stay invested as long as possible as long as the charts continue to agree. Without showing you the monthly charts on our primary indexes, S&P500, Small Cap, and International, just know they all say stay in. Now let’s look at the daily charts for a little fine tuning.
First I want to make sure that you know Friday Bonds fired a sell signal. So if your in bonds, Monday would be your bailout day unless recovers $107.22 or above by 11:30am. If you have been reading my blog and you’re invested in Bonds, well you should have seen this one coming. If you’re invested in the L-funds, it doesn’t matter which one, you do not have enough bond exposure to really hurt you, so do not worry about it. If it bothers you that you are invested in bonds via the L-funds, setup your own distribution inside the TSP that replicates the current setup date and take your bond money and spread it to the other accounts. Example, the L-2050 has about 9% invested in bonds. Take that 9% divide it by 4 and put 3% in the C-fund, 2% in the S, I, and G and your done. Your current distribution based on the TSP site for the L-2050 less bonds should look like this. C-44%, S-21%, I-28%, G-7%, F-0%
Last Thursday the Small Cap fired a sell warning by breaking down through my CBL line. Then Friday is totally reversed back above the CBL and cancelled that warning. The current pullback in prices is a another classic Bullflag and it is now 13 trading days old. I believe that break of the Bullflag is due any day now, but which way it breaks is just going to be a guess. Odds are always that a Bullflag breaks up and out, so let’s hope the odds are stacked in our favor again. The Sell or bailout point this week moves up to $898 on a Daily chart. We should sit and wait on the S-fund.
The International index also fired a warning and quickly cancelled but unlike the Small Cap, the International is still really close to being in trouble. My CBL warning is only 9 cents below the current price, so expect it to fire again next week. The 50 day moving average, which would be the second warning level, is also within a dollar. Things here are little more tight but we still have a Bullflag and a possible break to the upside. $62.10 is the sell or bailout level, so we sit and watch here also.
It seems that I put a lot of emphasis’s on the S&P 500 but this week, no warnings. Currently everything is safe and we should just sit and watch. Sell or bailout point is $1682.
Conclusion this week is pretty easy. C,S, and I, we sit, watch, and stay invested. We also want to stay invested as long as possible because of seasonality reasons based on the last 3 years. Bonds we are out and have no interest in being invested. That’s it. Let’s see what happens with these Bullflags on the S and I. Will the odds play out again in our favor?
Hope you had a great weekend.
No comments:
Post a Comment