Well it turned out to be a very good week for those that stayed in, but when I went back and looked at my charts from the close last Friday and then saw the market action Monday, I would still play it the same way. I have said this many times because it is so true and now I will say it again.
“I would much rather wish I was in the market, then wish that I was out.”
After Apple reported it’s earnings, and they were block buster numbers, then stock market seem to ignore every bad news report that came out. The Small Caps exploded out of the gate and ended the week with a 1.83% gain for the week and erased it’s April monthly loss. So where does that leave us going into next week? Let’s break into the charts and see.
This first chart is the S&P500, just shows how fast things change and perfectly shows how no one could have played it correctly unless they were gambling. If you remember, those were my exact words. It would be a gamble to guess which way the market would break. We were in a channel, we had a long run to that date, and markets were not going up based on earnings. Well after Apple’s report that all changed. The chart shows prior to the horizontal green line, which represents the close, Friday 4/20/12, that all signals were screaming sell. Then by the close this Thursday, everything had changed. The primary and most important thing was that price broke out of the top of the channel and is telling us we are good to go. Then we had several indicators on this chart agreeing with price. So in conclusion, I would have to say that we should be back in the C-fund. If your like me, that move will have to wait until May 1st and we will have a little more time to see where we are heading. Below you will see one more daily chart and one weekly with a few notes to confirm the above paragraph.
So even though the stock market went zooming, specially Wednesday through Friday, the bonds held up nicely and even had a tiny gain. So we lost nothing this week except gains that we never had. So what happens May 1st? Well the S&P500, Small Cap, and the International indexes are all saying be in. The Dow 30 and Nasdaq agree. So the way I see it we have no choice but to get back into the market and ride this upside some more while we can. Yes, that can change in two days, Monday and decision day Tuesday, so let’s just see what happens. I will also have to make my decision on what to do with my Bonds at that point also.
Last little note. The month of May. Let’s look at the last 5 years to see if running away in May is what the odds are saying.
May 2011 – (1.4%)
May 2010 – (8.0%)
May 2009 – 5%
May 2008 – 1%
May 2007 – 3.2%
So 3 out of 5 years we had positive months but the last 2 were negative. This is why it is so fresh in our minds and why we think that the odds favor a negative month. So I’m going to stick to my charts and do the best I can to ride the upside wave.
TSP Distribution: G-fund 75%, I-fund 25%
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