Not a bad week this week. The Small Cap gave us all our gains for the week. When you look at my gain chart that I posted yesterday, it looks like the International had a good week, but in reality it should only show a .2 to a .3% gain. Not sure why there is a discrepancy in the report. We have 4 more trading days left for December and the year of 2017. What a year we have had. It really makes me feel good to see some of the young people out there that follow me, reporting back with gains of 20% plus. I do want to impress just a little bit of reality to these newbies, it will not always be this rosey. At least 3 times in my 31 years of working for the Government and making deposits into the TSP, I saw major pullbacks of 40% plus. So, learn to run your accounts now to minimize the bad years when they come and they will come. The main thing to learn and know, is when to get out to minimize the damage so the recovery doesn’t take years to happen. Let me show you a little math and then I’ll get to the daily charts.
If you take a 50% loss in one year and the next year you have a 50% gain, did you break even? No, you did not. Watch this so you understand. $1000 * (50%) = $500 loss. That leaves you with $500. Ouch. $500 * 50% = $250 gain. That leaves you with $750. That is not a recovery or equal amount. You need a 100% gain in order to recoup a 50% loss. So, the lesson here is we never, ever, buy and hold. We babysit our TSP account while working and retired until death do we part from this earth. It doesn’t end when you reach your retirement date.
Now to the charts.
The S&P 500 is still a thing of beauty and will make the worst trader/inverstor look good. It does appear after the last 4 trading days that a Bull flag is forming. That is actually a good thing as prices pause and then continue higher most times. Volatility is low and the DMI is very positive. So I do not see a change in direction for awhile for the C-fund.
The Small Cap on Monday had a very impressive pop that almost equaled our all time highs. The remainder of the week price just grinded sideways. The DMI below is positive but it still looks very undecided to me. Looking at the last 5 days of trading and the short trading bars for each day, it appears that volatility has slowed and that is good. Over all there is nothing to like here and we will continue to ride.
The International had a very explosive and impressive Monday, then Tuesday gave it all back plus some. That was a little disappointing because price temporarily broke through overhead resistance. I was hoping that price would never look back and continue higher, but we are right back in the middle of the consolidation channel. I think at this point we have a 50-50 chance of price breaking in either direction. The odds prior to this week is that we had 80-20 chance of prices continuing higher, but after falling this hard back into the channel, it look much less positive.
Bonds had very bad week when you look at the chart. Price fell out of the bottom of the channel and I would have to assume we are heading lower. It will likely be just a continuation of the slow downward trend that we have been watching since September 7th. There is still nothing to like here and I will remain out of bonds.
Conclusion: No matter what, if you have been following my exact moves this year, we are going to end the year very postive. I do not expect things to change anytime soon with my setup because of one main thing. The Tax Bill that they are going to sign. Good, bad, or ugly, the stock market will love it if it passes and will pull back 5% if they do not pass it. If you haven’t figured it out yet, they do not pass things in Congress for the little or middle folks. It has always been about big business and it will remain that way until they bankrupt the country. So, you might as well invest and ride the wave of the people with money so you can get a little piece of the pie. Having an opinion about weather the tax bill is good or bad for whoever doesn’t really matter. Just ride the direction of the wave or step off and swim back to shore and get nothing. Bring on 2018, let the TSP growth continue.
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