Last week really turned November around and it appears now that we will have another positive month. 4 more trading days left before our monthly moves need to be re-evaluated. Before las week, I really thought things were shifting and a shift in positive wasn’t far off. So let’s take a look at our daily charts.
Everything with the S&P 500, which is our C-fund, is warm, fuzzy, and cozy. The chart is almost to perfect. We reached new all time highs again last week. Volatility is falling and is very low. DMI has turned positive and looking at the bottom of that particular area on the chart, the blue line crossed above the red which indicates a strong uptrend.
The Small Cap daily by far was our leading indicator that we were heading lower. All the signs were there. A failed bull flag breakout from 3 weeks that was suppose to be marching us upwards of 70-80 points higher. Then price formed a consolidation channel and fell out the bottom. The old red CBL line, which has now been moved, was broken to the downside as was the 50 day moving average. Everything was screaming lookout below. Then price had a very powerful 4 day march higher out of the topside of the channel. The last two days of the trading week, that price march slowed a little bit, but Thanksgiving day was between those two days. So all sell warnings have been canceled and we wait to see next week what type of response we get from that powerful upsurge in prices. What I’m looking for is for price to hold above the channel, even if it just goes sideways for the rest of the week. Maybe with that consolidation and bull flag breakout combined, we will get our 70 point move higher. That would be a great way to end 2017.
The International index also canceled it’s sell warnings and returned to more recent highs. Volatility is positive. DMI is turning positive, so everything is looking good. Something new has popped up on this chart that was just out of view until this week. Overhead resistance that dates back to June 2014. I would normally expect price to pause at that level but this dates back three and half years. I am having a hard time grasping that price or traders would really have a memory of this level. I expect price to break through that overhead level and continue it’s slow upward trend. I did mark this level because we who read chart trends and patterns would mark every single time. We shall see what we shall see.
Bonds appear to be forming a consolidation channel that is between the green buy CBL line and the last two pivot lows. The down trend line has been broken again as it is drawn today. Volatility is low and the DMI is mixed. Is this a reversal in the making? It could be. I do know that those last two pivot lows, which helped me draw that yellow support is important. The longer we stay above it, the more likely price has bottomed. If price should break below that level, then this was just a pause before the downtrend continued. The only thing we can do here is watch. Based on what I see, I am starting to believe a bottom has been reached.
Conclusion: I believe our 3 primary indexes that we have been in for a long time will continue higher. If Bonds have found bottom and prices do start to creep up, this will likely slow the other 3 indexes. November 2016, yes last year, was a once in lifetime killer positive month for me with a 6.31% gain. I didn’t expect that for November 2017, but I was expecting to reach my monthly goal of .7% gain. It appears as of right now, we will exceed that goal. Normally, November through April are always the best times to be in the stockmarket and based on the bias that whatever trend your are in will continue, it looks like it could once again be a good time to be invested.
I am going to throw some raw numbers at you to make you think, you cannot invest using fear, but if you have a method that will make you mechanical, you can sleep. I taught myself to be this way before I retired. I wanted to be able to make decisions with my retirement account without having to pay someone to do it for me. I also needed it to be a method that would not be greedy which normally creates dumb decisions. Been there done that. I know eventually all these making new record highs will end and eventually I will be invested 100% G-fund when my monthly moves turn negative. But until that happens, I can sleep and know that my retirement account will continue to grow faster than inflation. Now those numbers. My last deposit in my TSP account was July 18th, 2017 because of retirement. My account has grown $73,217. Since December 31st 2016, my account has grown $200,000. So to my followers, specially those that are retired, you heard me talk when we worked together and you knew I was working on a system that would allow me to run my account once I retired. I am doing that and nothing has changed since retiring. There is no way that these gains I have experienced recently can continue. But it doesn’t matter people, if we have a 5 to 10% drop in prices and I give $50 to $100,000 back, I still had a major gain that I would have lost being overly conservative. Here is the kicker. The C-fund, S-fund, and I-fund that some think are so risky are nothing more than glorified mutual funds. If the markets get pounded, mutual funds would take a smaller hit. Inversely, you will never get the most gains to the upside. Taking your money out of the TSP and investing into individual stock picks is what I consider insane. That is what I call full risk. I have never considered the C, S, and I risky. So, those that worked with me and talked with me daily knew this about me. For those that follow me now that I have never met, you now understand more about why I do what I do. I am not here to tell you what to do or change your methods, but to teach you how to be calm and mechanical so you can sleep. Listening to the TV or radio news and or banter from someone that will never show your their actual returns, creates fear and bad moves. I put all my numbers out here for all to see and I even copy and paste directly from my TSP account, my PIP. I also let you see first hand how I come to these decisions. Keep it simple. Keep it mechanical. 12 decisions a year. Anyone can do this.
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