This week was one of those weeks that is hard to watch and unsettling for all. After Monday mornings pop up, the next three days we were down and even though Friday closed up, we finished the week in the hole. Now before we panic, look down the monthly column in the above chart and unless your in Bonds, you should be happy. The only major concern I see is the International fund. We are basically even for the month and anytime we are dealing with Europe and Asia we have to be cautious. At least at this time in the market cycle.
I just do not feel it is time to panic but I do feel we need to be alert for change. This thing could snap lower in a heart beat but until it does, I would ride it out. If the S&P 500 was a stock, I would be looking to sell if price closed below $1389.97 and if price closed above $1407.75, I would buy. That is a pretty tight range but what it will do for you is to really keep you focused on price movement. This uptrend is strong and when you have a trend this strong it take time to destroy it. Plus the natural movement of stocks is up, bot down. When was the last time you heard someone say they were buying a stock in hopes that it will go down? I still believe people are buying pullbacks and when you look at Friday it would appear that buyers stepped in to buy the dip. The weekly chart for the S&P500 is so strong that it is hard to see any reason to worry. The monthly chart for the S&P also looks just as strong. I do not want to become complacent and fall into the trap where everything just looks so rosy that it will never end, but when I read the current charts, I cannot see an exit.
Chart above left is Small Cap and right is international Fund
What I want to point out on the Small Cap and International Index is how close things got to being really bad on Thursday. Small Cap closed barely above the sell line and the international closed just below the sell line. Friday, they both snapped back into the zone. Their weekly charts are just like the S&P500 in that they show nothing to be concerned about.
I will be curious to see what happens next week. I know I have said it before, but I think it is going to be an important week. We are sitting in what I feel is in the middle waiting to see if buyers or sellers are going to step in. Even though I do not read stocks news on a regular basis, I do read an listen to a few guys on the internet and something interesting is starting to brew. You may have already heard this, but Interest rates are beginning to turn up. If interest rates do go up it good have a negative effect on the overall stock market. I also believe that it would destroy bonds. So be very careful if you are in the F-funds.
Conclusion, I’m riding this out until it makes me get out. I will still not invest in Bonds.
TSP Distribution: C-fund 25%, I-fund 25%, S-fund 50%
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