Wow what a wild week in stocks. Tuesday we saw the largest single drop for a day in 2012 and it kind of reminded me of last Summer. Monday was also a down and I truly believed that we were going to have a down week because of the market action the week prior. I even made the comment in last weeks post that I would not put new money in this market if I was safe looking in. Going into This week the Transportation, International, and the Dow all looked like they were poised to nose over, so I wanted to be on alert for a move out. I even posted levels to watch and if prices closed below, you should consider bailing out. After Tuesday close, I had thoughts of pulling money out of both the Small Cap and International fund, but I held in there because of the weekly charts were still saying to hang in there.
Look at the Small Cap daily chart on the left above and see how it saying bailout? It had a failed breakout on the Bull flag, and then it broke down through $700 support level. The little purple dots above price were screaming sell, and that faint gray line did a crossover to the downside. So there were so many reason to bailout on the daily chart. Then you look at the Weekly chart on the right and the only thing that stood out was the slight downward slope of price the last 3 weeks. All moving averages are still going up and oscillators still look good. I do not want to give you a false impression that we are good to go for the next move higher, but it was encouraging to see buyers step back into the market and support it. I truly felt there were and are a lot of investors that feel they missed the boat and will be looking for dips to get in. So what needs to happen in the future to confirm the next leg higher in the Small Caps? We will need to see price close above and then rise above the 714 – 715 area. We know that 700 is support, but that 714 –715 is overhead resistance for the last 16 days or 3 weeks.
The S&P 500 look identical to the Small cap in it’s movement the past week but what I wanted to point out is that resistance level at $1370. We need to get through this and then we should have a nice move higher. I think it will be a psychological level because it dates back to downtrend that started May 5 of last year. So we made a full recovery and are set to make newer highs.
The International Index had a bad week and I guess I shouldn’t be surprised considering all the crap that has been happening in Europe. Even though it ended up down for the week, it did create and nice pivot low that we hope holds at $52.59. Price is still above the 50 day moving average and the green uptrend is still in tact, so I will hang onto to this for now.The weekly chart is still ok for the moment, but it did take a hit. Since the weekly just made a crossover to the plus side two weeks ago, I’m hoping that it will hold and not be a false breakout. Nothing is perfect in this stock market game as we have all seen in the past.
Conclusion: I will make no changes for now. I feel we are good in the C and S funds, but the I fund needs a little work. The I fund has had two down weeks in a row. F fund or Bonds? You should know my feelings on this by now, but just in case this is your first read, there is no reward here at the moment and I would rather put my money in the G-fund if I had to choose.
TSP Distribution: C-fund 25%, I-fund 25%, S-fund 50%
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