TSP Distribution: S-fund 40%, C-fund 40%, I-fund 20%
So the question of the week is, did we all enjoy the drama this week? After 7 straight weeks of gains it is very easy to get spoiled rotten with the gains. I mean how dare anyone take a profit and cause prices to fall. My personal TSP account went down .58% even after all this drama. Was it just news that caused this pullback? Well maybe not. We were poking through the top of channel where overbought signals fired and things were getting bit hot, so a little selling was almost text book. Technically since mid-November we have done nothing but go up, so selling had to come sooner or later. So maybe News was just the catalyst that started the pullback. All I know is it was a short dramatic pullback and I would really expect a little more selling pressure to come if this was really a serious correction.
First look will be the S&P 500 and if you open the chart you will get a good look at price sticking out the top of the overbought channels. Just remember these channels are just a guide not a specific rule. After Wednesday and Thursdays selloff, my CBL line was touched but not crossed, so we are good to go for the moment. What you cannot see is the short term uptrend line that was broken, so I deleted it off the chart. What is great about this chart is that the intermediate uptrend is still working and still rising. The 50 day moving average is also still rising and still good. If you ever wondered why I have two 50 day moving averages on the chart, this is the reason. I’m the only one that I know that uses this but one is the Exponential and the other is the simple. Exponential is green and is faster moving because it is front loaded. So when the green 50 is on top of the red 50, I know that things are really rolling, but when they squeeze together or cross, it is a good sign that things are slowing down. The 50’s are starting to squeeze but they are still pretty to me. Price is also still firmly above the rising 200 day and the small dotted primary trend is also very safe. So we are still safe here but being a realist, I do expect prices to go sideways or down while we consolidate the rise in prices since last November.
Small Cap above and all notes that are important are on the chart.
The International index above is a mess at the moment because pivots have no order. I draw trend lines off those pivots so if they do not behave, you cannot have trend. The positive to take away from here is primary uptrend is intact. One other note, we are oversold here so there could be pressure to force prices up.
Above is the chart for Bonds and we may finally be seeing a few signs of life. Still to early but worth watching. Notes on the chart.
Conclusion. Weeks like this are hard to watch on the daily charts. This is why most investors, long term, would prefer to watch and react to what happens on weekly charts. Weekly charts reduce the noise and need to make moves and as long as you do not listen to your buddy and the news. You can make logical decisions. Now watching and using daily charts to make moves can and will be more hair raising. I have several indicators that I use to help me make the right moves most of the times. They may not always be prefect but they normally keep me from taking double digit percentage losses.
After the close Friday we recovered a bit of the losses from Wednesday and Thursday and made that pain feel a little better. Chart wise, the S&P / C-fund are safe and looks setup to resume the uptrend. But just one day, Friday, cannot make a trend, so we watch. So if your in the C, stay and if your out, watch for now. The Small Cap / S-fund made the most gains for 2013 and also had the largest downward movement this week. We are below the CBL line but still above the intermediate uptrend line, so things are not total grim. One other good point is that we created a pivot low which is a normal sign that prices will run up for bit. So if your still in, stay and if your out, watch. The International index is just a mess and you read the notes. If your in, we have to stay on top this one more than the others because bailing is very close. Remember, I was going to bail Friday unless price reversed and it did, but it did get us completely out of trouble. I guess I do not have to say stay out, if your out, do I? Bonds, appear to making a trend reversal but is also a watch. The CBL and trend line was broken but the 50 is still going down and price is still below the 50.
So I do not see any moves at the moment even though we are tip toeing on a rope on bailing out of two indexes and looking to maybe enter another. Watch and watch closely is the word and sometimes you have to use your gut when you know all this information. I’m a very patient person when it comes to these type of charts and since my gains since November are so large, I’m willing to ride the wake turbulence for the time being.
Looking for C,S, and I to move upward next week, but I also realize this country’s news might thwart that hope.
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