After two so so weeks in March, we finally got a nice push through $1370 and even pushed through $1400. Almost 2% plus for all our indexes except bonds, but I’m not to surprised at that. The C and I funds ruled the week.
I have looked and looked and looked, I see nothing !! Is there a reason to be concerned that the market could suddenly reverse? Yes, we have come along way since the turn up October 4th. 25% to be exact. There really hasn’t been much of a pullback for profit taking or to test trend lines. It makes you wonder if the bottom will just fall out and all that profit will go up in smoke. There is no Holy Grail or crystal ball, so all you can do is to try and ride the uptrend and sit out the down trend. You will never get out at the top nor will you ever get in at the bottom and if you could, you would be very well off. People that do this day in and day out for a living cannot even achieve this, so how are we little guys suppose to do it? We wait for a sign, and there is no sign on these charts except for leave your money in.
Here are 6 charts that I monitor just for the S&P 500. The first on the upper left you should ignore because it is a one minute chart that I use to enter stocks. There are 3 dailies, the bottom center is weekly and the lower right is monthly. There is nothing here to hint at a weakness, pullback, and/or sideways churn. We could have a 3% pullback to $1362 and still be on trend. So unless I’m pulling out just because of fear, I have to stay in.
Can we have a pullback and still not pull funds out of the market? Open up the DJ Transportation index to the left and look at that correction and then looked what happened by the end of this week. The last two charts at the bottom are key, the weekly and monthly. They didn’t even hardly flinch even though the daily charts were in big trouble. Noise. This also is a good example of why you will never get in or out at the top, because if the Transports did tank, you would have given up a lot of profit. But how much did you gain getting there. All I’m saying here is compare, do you see anything saying get out of the C-fund or the S&P500?
So now after looking at the S&P500 and comparing it to the DJ Transports you can see why I can find no reason to pull out of the market. The $DWCPF or Small Cap is the same condition as the S&P500 with one exception. The Small Cap needs to gain another 18 points and break through the $738 level to be free and clear of resistance and start making new highs like the S&P and DJ-30 index.
The International Fund had a good week this week but price stopped right at a major resistance level $55.87. You can see it very well on the bottom center chart, which is a weekly chart. I think this is key level that has to busted and held before we can make any further progress here. If in the next week or two this does not happen, a pullback could follow. Notice no news in theory, just price and charts. So let’s watch this closely. If we can break this the next expected move would be to $64.35 which is a 15% up move. That would be a nice perk.
The last chart I want to talk about is Bonds. You can see the markings on the charts and you can see Bonds could be in big trouble here soon. The daily charts are breaking down and even the up trend on the weekly is breaking down. I would be concerned if not pulling out here if I were in just because of the break in trend line on the weekly. The crossover has not happened yet, so there is still hope for bonds. Me personally, not going to invest here. Be careful if you are in and or chasing to find the bottom.
Conclusion: I will do nothing at this moment in time and just continue to watch for a pull out signal. Right now I am concern that we have gone so far so long without a major pullback. It is hard to fight the feelings after the last two summer markets we lived through and because there is money involved. So until this time next week, good luck.
TSP Distribution: C-fund 25%, I-fund 25%, S-fund 50%
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