TSP Distribution: S-fund 50%, C-fund 50%
Pause. I keep looking at my charts of the 4 primary indexes that I follow, S&P500, Small Cap, International, and Bonds, and I keep coming to the same conclusion. It is as if someone has pushed a pause button. The reason that have come to this conclusion is that it takes data to see what is happening and the last 7 trading days or so, we really haven’t gone in either direction. Look at the weekly numbers above and you will see that most lines are showing 1/2% or less. So what I want to do now is see if I can find any additional help using some sectors like Health, Utility, Basic Materials, amongst others to help me get a feeling or picture of what direction we are heading. First I will go over the primary charts and then see if I can find something to helps us read the markets.
So after the big dump on Monday, the rest of the week the S&P 500 climbed out from underneath the CBL line and put itself back safely above. I will continue to use this CBL line until it is time to move it up because we never move it down unless we are chasing an opening to get back in the markets. That line would be Green, which means buy. Right now we are using a red sell CBL line. What concerns me here is that price is going sideways and hinting a downward slope. Hinting because it is unconfirmed using pivot points. Price is still above the 50 day moving average and the 50 is still rising. We also above the Intermediate and Primary uptrend lines. I’m I concerned? Yes because it just looks suspicious. That downward hint is concerning. I know I hate news but I would be an idiot if I didn’t at least listen to what’s going on with the Sequester. This has me a little concerned because it will affect the markets in one direction or the other soon. S&P500 / C-fund is on a Watch!
The Small Cap above looks to be established in a Bull Flag and it just so happens the top of the Bull Flag is the old CBL line. The intermediate uptrend is intact but by the slimiest of margins. To me it looks like next this line will fail. That is not entirely a bad thing if the Bull Flag holds up and does what it suppose to do and that is breakout to the upside. No guarantees of that, it’s just the odds. You have to wait for price to confirm it before you play it, so wait for it if your out of the market looking in. See the Green and Red 50 day moving average lines squeezing together? They are going to cross next week as soon as Monday and this means price is slowing down. This is the only thing that I use these 2 ma’s for. The Green is the most important 50 because I use that for price cross signals. Small Cap / S-fund is even under more of a close watch than that of the S&P.
The International Index I bailed out of Tuesday, February 26th and I have no interest here getting back in. The last pivot created was a pivot high and the meaning is downward pressure normally. In recent price action, the pivots have not held more than 4 trading days but how much longer will that last. The more times we create these pivot highs in close succession the more likely this index is going to rollover. Price is right on the CBL again and right on the 50 day moving average. So, if your out there is nothing here that I see begging you to enter. If your in this index, be careful. My issue here is that is incredibly hard for me to read. I would bailout.
Monday I mentioned in an update that Bonds fired a buy signal in one massive move crossing the downtrend line, CBL line, and finally the 50 day moving average. Tuesday price confirmed the signal, so by all the rules in my book, you can put bonds in the buy category. The next few days price went sideways and now looks shaky. So, if your in I would hold on to it and if your out, it is your call. Personally, I do not like bonds here I would rather just sit in the non-risk G if I had to choose. The Sell or bailout CBL is 110.03, so watch that level if prices start to fall. If the sequester holds up, bonds may be the place to be.
Just to get a little more feel for the markets I like to look at other indexes. I hate using the DOW 30 because it is just 30 stocks in the entire market but it is always on TV News. It continues to trend up and continues to make new highs. I guess you could argue that it didn’t make a new high Friday, but I would say, what? really? Then you have the Transportation index and it is just rolling along also, so that puts a positive spin on things. Finally I like to look at the Sector Select funds, and you will see a chart below.
Ok it looks complicated but it really isn’t. 3 of the indexes were down for the week and 6 were up as was the S&P 500. So it would led someone like me to think that the momentum is with the uptrend. I will be willing to say that it is a good sign but it is just an indicator that I have to read and right now, price on the S&P, Small Cap, and International do leave me a little doubt. To me it looks like everyone is watching and only a few buyers and sellers are playing.
Conclusion for Monday and the week to come, everything, the C,S, and I is on a close watch. The bonds are on a close watch on staying in or getting in. Now, doesn’t it sound like Pause Control? Charts are saying it, and I’m reading it, so I will not make any changes Monday but it would not surprise at anytime next week if we got a out right sell signal on all indexes. To be fair, it would also not surprise me to get an out right buy into either. This will be a very interesting week and month to watch and we going to hear a lot of chatter on news about it to. Water cooler chat should be almost as good.
Stay stress free!
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