TSP Distribution: S-fund 40%, C-fund 40%, I-fund 20%
What a week we had this week. Monday and Tuesday we had some major movement in the markets that put a lot of doubt on it’s eventually outcome by Friday. Suddenly everything that was good was turned upside down. So how did it all play out by the close Friday? Well let’s start with the S&P
If you ever hear me speak of the Primary trend, here it is. Since early 2009, the S&P 500 has been in an uptrend and this is a small but often very large fact that is overlooked by everyone. Yes there have been some bumps in the road but that is a pretty uptrend. Look to the extreme edges of the chart. Do you see it? We are approaching the all time closing high and I truly believe based on what I see here, we are going to at least touch it. Getting though that level may or may not happen, because of resistance that everyone in his brother will see, but I believe we will get there. This is a weekly chart and just based on this information, we are good and should stay in the C-fund/S&P.
Now if we zoom in on the S&P we can see the intermediate trend and the very short term trend. Even with all the drama from Monday and Tuesday, price did not close below the short term trend. The CBL warning was approached but price never closed below. the 50 day moving average is rising and price is still above and rising also. So unless you’re listening to CNBC, Bloomberg, or some other news source, this chart is screaming stay in.
Above is the Small Cap/$DWCPF and doesn’t it look a lot like the S&P? If you answered yes, you’re only partially right. I want you to click here “stock overhead”, so you understand overhead. Unlike the S&P 500, there is nothing stopping the Small Cap from rising. It is setting new high’s almost daily because price is in a vacuum. Eventually price will fall when it is time for profits, but picking that time is a no win situation. So we watch price action and hang-on to as much gain as possible. Now looking at that chart above and the primary trend, there is nothing to do based on that information but ride it.
Zooming into the Small Cap, there is nothing here not to like unless your scared of making new high’s daily. Ok, maybe not daily, but it sure looks that way. If you can find a different reason why not to be invested here, speak up.
Ok, above is where things start to get a little ugly. If you have been following along this week the International daily index is under stress. First though I want to show and talk a little bit about the weekly long term chart. Looking back at this chart for the last 3 years, it has been in a consolidating pattern. You can still make money here. I drew a gray box to show that price around December 12, 2012 that we broke out of short term overhead and established a nice primary uptrend. As you can see on the chart though, we have some major overhead resistance still to overcome before we can start setting yearly high’s, but we are closing in on it. Lastly just a few more obvious details is this, CBL on a weekly scale is safe, 10and 30 day ma’s are properly setup and running, and lastly the primary uptrend is safe. We were so close to making a Pivot high this week that I should call it, but 1 cents was the difference between a yes or no, so right now, I’m going to let that go. But remember, forming a Pivot high is not a good thing.
Zooming in on the International Daily index, you can see upper right there is stress. Effectively the first four days of the week price fell everyday and then Friday we had a small reversal. What is really important is even though the intermediate uptrend was broken, the CBL held. Price also held above the rising 50 day moving average, so I call us safe for the moment. The next point that is note worthy is the forming of a Bull Flag. If it holds up, then the next leg up could be a very nice one. What you do not want to do is bet on it. Wait for confirmation when price closes out of and above the Bull Flag and then we will all know. The other positives to take away from this chart is that price is still above the rising 50 day moving average and above the primary uptrend.
Once again, just like I said last week, stay away from bonds and or the F-fund. If you open the chart on the right, which is the weekly, you will see a classic crossover and a bailout signal. The zoomed in daily to the right is saying stay out, no signal close to firing yet to get back in.
Conclusion: Staying in the C and S is still good. The I is under a watch and does give me pause. So if you are in the I now, stay for a bit more in case it zooms back the other way. If your standing on the outside, wait for a price reversal here and then get in. Breaking out the new bull flag would be your signal. If I were in the L-funds, any of them, I would stay. There is not a weekly chart other than the Bonds/F-fund, that is signaling a exit sign. The underlying forces behind the scenes are still saying we are going higher. So just like last week, I will stay invested for now and wait for price to give me a exit. Believe me, price will tell me when to get out.
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