TSP Distribution: S-fund 50%, F-fund 50%
We had another good week in the markets and it was really hard to put my money back to work knowing everything we know about the fiscal cliff. I know I sound like a broken record, but the news will absolutely drive you nuts if you listen. Believe me, that doesn’t mean that I turn it off. When things turn against me or for me suddenly, I like to know what’s driving it. I do my best though to read my charts, make my decision and then look at the news. Doing it the other way makes me do bad things. I can show you paper that I’m right.
This weekend we really to talk about all 4 indexes and what moves I will be looking to make Monday and what moves that you want to consider. I could not make a move into the C-fund when I made the entry call last Wednesday and Thursday because I spent my last move on Tuesday entering the Small Cap and Bonds. Let’s start with the S&P 500 which represents the C-fund.
I normally have 3 rules that have to be broken before I enter or exit the market. Normally meaning that sometimes I break my own rules and normally I’m wrong, so why I do it is beyond me. On 11/23 we broke my CBL line on the up side and I always use this as my first warning signal that I need to be alert for a move in or out. On the same day, the red downtrend line was broken and then price continue to confirm that break every day after. We had to wait a bit before the final rule was broken and that was this past Wednesday 11/28 when price closed above the 50 day moving average. This meant that Thursday was a go as long as price held up, which it did, so we all should be back in at this point. So even with all the bad potential news that is out there, you got to follow price. The other thing that was important this week is that volume returned to the market and it did not collapse. I was scared because of the moves in the prior week when we rose 3.5% on very little volume, that we would loose all that gain when everyone returned to work. That didn’t happen.
The Small Cap was actually a few days earlier than the C-fund but as you can see on the chart all the same rules were broken. So if price is telling you to get in, you got to follow it. I actually put a lot of weight in the 50 day moving average, so when that item fell after the CBL fell, I was ready to enter. As it played out I was actually just one day ahead of the last item falling, red downtrend line. The next time you see the chart above, next week, most of the lines will be deleted and all the current uptrend lines will start to appear. I did place the new Exit CBL line on this chart and you can see that in red around the $693 point. So that makes two, the S&P 500 and the Small Cap both say to be in the market.
The International Index was actually ahead of the other two indexes because in my opinion we could have been 11/21. Also, look at the volume the last three days and it was all buying volume. So there is no reason not to be invested in the I-fund. So if you’re an L-fund fan or investor, you have the 3 major moving indexes moving in your favor. So all of the L-funds are a go also.
The chart above is Bonds. There is nothing exciting happening here but it is steady. The only reason that I even jump in here at the time was for safety in case there was a collapse. Since December is here and I have my two moves for the month, I will likely bailout of bonds and into a mixture of the other three funds.
Conclusion: Look, I hate news and I hate letting it influence my moves in and out of the market. But I feel I would be a fool if I didn’t at least give a little credence to the fact that if these guys/women in DC do not get something put together prior to January, the markets will collapse temporarily. You have to understand that if a millionaire can save $50 to $100,000 because of tax rules, they are going to act on it. So that means some heavy selling could still take place prior to the end of the year. But after that, do you really think for a moment that every investor in the United States and around the World is going to stop trying to make money? Never, that’s what they do and they will adapt to whatever tax rules are placed into effect after January and they will start trading stocks again and again. It’s been proven many times throughout history. So if the markets are holding on and green Monday, I will be shifting money once again into the C,S, I, and possible just a little F. I follow price.
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