Another very ugly week but the market also sort of settled down at the same time. How is that possible? I will get to that in a bit, but for now, what’s important is that the International Index once again had a horrible week and added to last weeks 2.75% loss with another 2.12% loss. That is just painful to watch and if you had been watching my post during the week, you knew that the International index did a negative weekly cross over to the downside and you should be out of I-fund all together. If your in the L-funds, you will have exposure to the I-fund no matter what. The S&P 500 and Dow 30 didn’t have as bad a week as the I, but both were down over 1%. The real surprise to me this week was the Small Caps. They were only down a measly .32% which may have meaning. Bonds had an up week but not much to dance about, but up is up. My personal gain for this week was also just .05%, but a gain is a gain. I’m more out of the market than in with my current setup that you will see at the very bottom of this post. Now to the charts.
The daily chart on the S&P500 at first glance looks really bad. Yes, we broke the long running $1370 support which by itself is bad. Then we approached the bottom of the channel that we have been watching for at least 2 weeks and we went through it in both directions a few time this week. We ended the week closing just below channel at $1353. Now take a look at the last 4 days of this week and you will see that it appears we may have found a bottom. There is a lot of sideways movement here which could mean sellers are losing there resolve. There is also the fibonacci retracements, which I do not show here, that are at the first level of 23.6% or $1342. So next week, is we fall further, I would expect to see major support at $1340 – $1342.
The Small Cap index finished .32% down for the week and if you look at the closely at the last 4 days of the week, it appears that a bottom is forming. We are still below the 50 day moving average which means there is work to do before we even think about re-entering here. We also stayed in the channel which tells us consolidation is still in effect. Looking at price action this week, I would expect more of the same next week.
Above we have the International Index daily and the Weekly. The daily charts shows that price has fallen well below the 50 day ma and falling quickly below the channel. Trying to guess the bottom here is very dangerous and I would stay away from this index unless you just feel lucky. The other bad news is the weekly chart shows that we have a negative crossover and that normally means 6 to 8 weeks of downward pressure.
The first chart above is the Bond fund daily and the first thing I want to point out is the Major Overhead Resistance at $111.00 That has been unbreakable since mid-August 2011. At the present pace we should wee something happen there at the latest May 21. We have a nice uptrend established, we are above the 50 day ma, so things are in a slow grind uphill as of today. I really do expect us to pause or go sideways once we hit $111. The only wildcard is if the S&P 500, Dow 30, and the Nasdaq rollover. If that happens then the bonds should go up because people running to safety. You can also expect just the opposite if the Stock market takes off. So just know there is not a lot of reward left in the bonds based on charts only.
Conclusion: Next week will be very interesting to say the least. Once again I wish I was 100% G because I have no clue which way this market is going to break. Stocks are at the bottom of most channels and are looking like they just want to continue to fall. Then on the other hand they also appear to turning sideways and forming a bottom. News? The news out there is just awful and I see nothing to inspire buying. So I think I will just wait to see what happens because I would much rather wish I was in the market than wish I were out of the market.
TSP Distribution: G-fund 75%, I-fund 25%
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