Are you surprised? To look at the chart above you would not be thinking all time closing highs but that is exactly what happened Thursday and Friday. I’m considering the green wedge now broken to the high side and I will remove it. Surprisingly, that red CBL line that we use for sell and buy warnings, is still accurate. I need one more more up day where the bottom of the leg is higher than the last three. There are no warnings in the C-fund.
The Small Cap started to make a recovery after recent pull backs. Anytime you have a run up in prices eventually there will be profit taking and consolidation. The past two weeks the Small Cap has done just that, consolidate. This week prices returned to the upside. The uptrend is still intact and the good news is that all warnings have been dropped. Price is back above the 50 day ma and the red CBL. So for now, all is good here and we watch.
Last week I mentioned that even I will be curious what happens in the International after such an explosive Friday it had the previous week. Well come Monday and Tuesday we gave a little bit back. The rest of the week, prices reversed and it marched to yearly highs. Have you noticed that I say all time closing highs on the S&P500 and early in the year, the Small Cap? I never say it with the International. I say yearly highs and there is a reason for that. So let me show you how much work there is left to do here.
What we have above is the monthly chart that runs back to the recent highs and all time highs. June 2014 were the most recent highs in the International index. We currently sit at $64.42 and those past recent highs are $70.79. That is another 10% push to the upside that still has to be made. After that level has been meet, there is not much left and there will be a vacuum to the upside. It takes 3-5 years to work off overhead supply of all the buyers that got stuck in higher prices and finally they just sell after a long wait trying to get their money back. So with that knowledge, the all time highs are 7 years back. So other than a big news event or me saying all time highs, it really means nothing. What matters is the money that goes into your pocket when prices go up, not what I say or the news says about all time highs. Better said, follow the trend and not the news or rumors.
Conclusion on the I-fund, no warnings, we just ride the wave, and there is lot’s of room for higher prices.
Bonds are still under stress. The good news here is that major support held this week and it never closed below that level. Price on Friday had a nice jump to the upside but the same thing happened the previous Friday and that didn’t hold. So I think the next few weeks will be critical fro bonds. We are either going get a very slow grind back up or rapid self off if that major support is broken. Next week you will not see the red sell CBL line and a new green daily buy CBL line will be drawn. Coincidently, that level lines up perfectly with the current monthly sell/buy line. Things here are shaky at best and if prices do not move back to the upside over next 9 trading days, monthly bonds will be a sell.
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