We finally got a little bit back last week and it was good to see. Still not sure we are out of the woods and things are getting ready to roll, but it does look promising. So let’s take a look at the daily charts.
Very rarely do I talk about Bonds first, but Friday price made a big move. The upper red downtrend line dates back to January 30, 2015. Yes, a year ago. Price broke out above that down trend line for the first time. Price also broke above the monthly moving average, so there are signs that Bonds my be the fund to be in for awhile. They will likley not return big percentage gains, but they will likely be positive gains. Something I can say that I didn’t have last year, positive gains. Bonds confirmed their buy signal on January 13th of this year and slowly keeps marching higher. If Bonds are going to be the winner this year, that doesn’t bode well for stocks, because that normally means that investors are looking for safety.
Two weeks ago I laid out a plan to attempt to make an early entry into the C-fund based on support at $1870. I have been watching and waiting and last week I made the move all in. So right now in time, I’m not following the monthly moves but are basing my decision on that the things have bottomed with rules. I made this call here on 1/16/16. Scroll to the bottom and read last 3 paragraphs. Friday price closed above the green CBL buy line and is the first stage of building a daily buy signal. Price needs to continue higher and overcome the 50 day moving average and stay there and we have an early buy signal. 50 day ma is in light blue and it’s current level is $1977. That’s another 37 points higher than the close Friday. Keep in mind the 50 day moving average moves each day, so that number will continue to fall near term. Also I noticed little things I do not normally talk about here. Volitility is falling and has been falling for the lat 7 trading days. Lower volitility means prices go up. DMI also peaked on 1/20/16 and appears to be heading back to neutral. Getting in or out at the extremes is normally a good move but finding those extremes is very, very difficult. Getting back in the C-fund 100% last week, I may have actually nailed that extreme plus or minus a day or two. So what does all this mean? It looks promising that the S&P 500 might have found a bottom and a new uptrend might be forming. No one can forcast the future, so who knows. The entire thing could fall apart with a sneeze of war or bank issues in Europe.
The Small Cap daily looks as though it is trying to find support as did the S&P 500. It is to early to get excited about buying here because there has been support before that totally crumbled. We only have to look back to last December to see that collapse and it was sharp. You could argure the S&P 500 did the same in December, but it was more jagged and harder to see. As of today, price is $21 points from the green CBL buy line, so that is promising. Just like the S&P 500, we would also need to see price above the 50 day ma, which is $48 points away. So it’s early and less positive in my opinion to bet on the Small Cap here.
The International index is moving back to the upside but I have no faith that it will continue. This is the point in the current structure that I would expect prices to once again start to roll over to the downside. We are close to the gren CBL line, but everytime we get here price seems to collapse. There is signs of life and next week we could more information that would support that. Here and the Small Cap.
Conclusion: I still like my call on the S&P 500 and the F-fund looks appealing. I would invest in both. The Small Cap and International could go either way and maybe next week it will show us. I’m staying 100% C-fund for now.
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