Thursday and Friday were totally devastating if your watching your TSP with daily charts. No one with as much money as I have invested like to watch these kind of days. So let’s look at where we are and if we need to make a move Monday. Thursday we had a major move down, but no real damage was done to the chart. Friday there was even more damage done and this time things got taken out. First to fall was the short term uptrend, which I use as a heads up warning. The damaged started next when my CBL or 1st warning level was taken out. Then the 50 day moving average was taken out. Is this reversal done? I have no clue but running to safety now is not in my play book yet. We have another 2.7% to fall before I would make that call for the peeps that like to make moves using my daily method. The long term traders really have to wait until January 31st to make a decision and if today was that day, price is still 4% above the bailout level as of today.
So take a deep breath and let’s wait a few more days and see if this was just a shake out or it is a real reversal. Remember, I will never get you out at the top and I will never get you in at the bottom, but I hope that we ride the wave of the uptrend the majority of the time. Plus I give you a way to make decisions without emotion or news. So breath.
The Small Cap didn’t lose as much as the S&P500 and International indexes but it still lost 2.3% this week. There was only 1 warning fired here Friday when the CBL fell. On the daily chart, price can still fall another 4.5% before we get a sell signal. Price is also still established inside the up channel and still above the Intermediate trend. So even though we lost a lot percentage wise, structure wise, we are ok for the moment.
The International Index on Friday got slammed. Warning 1, 2, and the sell level were broken. The Sell level is within pennies, but price did close below the sell level. You can see the monthly level in purple on the chart and you can see that we are still safe, but that call cannot be made until next Friday. My plan here is pretty simple. If we are down again Monday by 11:30am, I’m going to take one of my moves and go straight to the S-fund. If I need to bailout out of the S-fund sometime the rest of the week, I can still bail to G or F. I will get two more moves come February.
As stocks take on the stress of a pullback, bonds are still rolling slowly uphill. The buy signal that I did not take 10 days ago is more and more looking valid. I think at this moment in time, I will still stick by my guns and wait for the monthly signal to fire before I jump into bonds. If you took the daily buy signal, well done you.
Conclusion: This week hurt pretty bad, but on the other side of the coin, the massive gains I got in 2013 makes this seem not so bad. If we are down again Monday, I will close my position in the International and move it all to the S-fund. Seems silly, but I have 2 moves left and 1 week left in January. If I get lucky and stocks reverse, the S-fund will likely be the largest mover. If I’m wrong, I would have lost the money in the I-fund anyway. Other than that one move, I will do nothing else Monday and will wait for the market and price to tell me what to do. Not sure why the market has done a total reversal other than it’s time to take profits. Eventually these things happen and you just have to ride them out.
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