It has taken me awhile to figure out why maybe bonds are going up ever so slowly even as stocks still seem to be climbing. I think it has something to do with the Fed pulling out 10 billion a month out of the Bond market helping to ease up rates. This is all theory but it is something I heard mentioned the other day on TV. Either way, the chart for Bonds pretty much says that the trend is up but it moving like molasses. So if your looking for safety with a little more gain than the G-fund, the trend in Bonds is currently in your favor. Right now I will stay in stocks until they turn negative.
$1850 ??? That is what the question has been for awhile now and maybe, just maybe, we have finally taken it out. Some things were said in my little stock group this past week which is concerning but I could not find the black and white facts to back it up. On top of that, why all of sudden would I want to listen to something that is said over something that I can see. What was said is that in the past 30 years the S&P 500 has been rejected 3 days in a row from the 52 week high 4 times, and each time afterwards, we grinded sideways for at least 2 to 3 months. Ok, there it is. As long as we are not losing money and the trends have not been broken, I will stay in.
Thursday we finally closed above $1850. Friday we confirmed that breakout by closing above $1850 and finished at an all time high. That doesn’t mean we are in the clear because if you watched the price action Friday it wasn’t all rosy. At 2:40pm Friday prices started to tank and by 3:08pm we were once again below $1850. For the next 7 minutes we traded below $1850 but then buyers came rushing in to defend the position and drove prices into the close to close at $1859. So buyers are here and now the question is will they show up next week and defend $1850 again. I have no clue, but $1850 is now support, not resistance so let’s see what happens.
The Small Cap daily above is structurally sound at the moment. Just visually looking at the chart, don’t you agree that a pullback almost looks obvious? I would not be surprised at all to see a slight pullback to the first warning level of $1016. Nothing to do here but watch. Small Cap is leading the way so far in 2014.
Is the International poised to take off? This week this index closed above the resistance level and now it is converted to support. In February the I-fund was up 6%. That was the best of all funds. I wished I would have stayed in but that is just that, a wish. It will be interesting to me to see if this index has buyers to push it higher beyond this recent breakout. We have been here many times the last few months and every time, it reverses.
Conclusion: I’m sure most of my readers here have read the monthly post. The daily seems to be backing up all of that data. So smart money says that we should invest in each index except G which would mean 25% in C, S, I, and F. Also each L-fund from the 2020 and up would be a buy. So in my opinion you should just stick with what you have or mix your funds to create a distribution that suits your risk personality.
What did our indexes do last March? See my chart below.
Let’s hope that we have some similar returns this March, 2014. Have a great weekend.
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