01/23/14

Good Evening,

It’s frustrating to trade this market so far in 2014. With the market on its side, it neither gives nor takes. It’s impossible to be positioned for a rally or for defense because this market is constantly changing directions. One day, it’s best to be in equities and the next, bonds or cash. We correctly predicted this behavior several weeks ago. The problem, which is easily evident when you study the charts, is that there is not enough trading data one way or the other to establish a trend in either direction. A lot of factors favor a correction , but then again they have favored a correction for the past 24 months! So it is not so easy to say that you should be defensive or that you should be in the market. To do so is virtually a crap shoot in either direction. To put it in simpler terms, it’s a risk to commit in either direction. As some of you are all too aware, you can lose money in bonds just as well as you can lose it in stocks. So where do we go from here? Ultimately, this market will resolve one way or the other. We must watch the charts closely and jump on the new trend in whatever direction it may go as soon as we can in fact observe an established trend. Until then, we must suffer through more of the same conditions that we are seeing today. Yes, we could sit in cash, but then again we didn’t make over 35% sitting in cash and waiting for a correction last year did we? No, we must be patient and realize that we are playing with house money… and never forget…God is still on the throne!

Stocks drop as investors sweat earnings

 

The day’s action left us with the following signals: C-Neutral, S-Buy, I-Buy, F-Buy. Our current allocation is 64/S, 36/I. It has gained +0.94% so far in 2014. We should stay in positive territory after today’s selling, but barely… Here are the latest posted results: 
01/22/14
Fund G Fund F Fund C Fund S Fund I Fund
Price 14.3085 15.8681 23.8509 34.2403 25.6717
$ Change 0.0010 -0.0297 0.0167 0.1787 0.0658
% Change day +0.01% -0.19% +0.07% +0.52% +0.26%
% Change week +0.03% -0.13% +0.35% +1.00% +0.21%
% Change month +0.15% +0.80% -0.10% +1.69% +0.42%
% Change year +0.15% +0.80% -0.10% +1.69% +0.42%
  L INC L 2020 L 2030 L 2040 L 2050
Price 16.8535 21.8606 23.5436 24.9383 14.1267
$ Change 0.0052 0.0206 0.0298 0.0379 0.0247
% Change day +0.03% +0.09% +0.13% +0.15% +0.18%
% Change week +0.10% +0.22% +0.28% +0.34% +0.37%
% Change month +0.22% +0.30% +0.36% +0.42% +0.45%
% Change year +0.22% +0.30% +0.36% +0.42% +0.45%
We were starting to make some headway, but we got knocked down again with today’s selling. That could all change tomorrow with the positive earnings report from Microsoft after the bell. We’ll see… Here’s what’s going on with the charts. Taking a good look at yesterday’s results: 
“The SPX has been bouncing along under overhead resistance for about three weeks.
Zooming in for a closer look we can see the rising wedge pattern, which will probably resolve downward; however, we can also see a significant line of short-term resistance that combines with the rising trend line to form a triangle. The flat side of the triangle is considered to be the weakest side, so it is possible we are going to see a breakout above that line. If that happens, the top of the wedge comes into play as the next line of resistance.”
Most of the analysis is courtesy of Decision Point.Com. Carl Swenlin, who runs the paid site, is one of the fathers of technical analysis, which of course is our investment style. This pattern will probably resolve downward, but how much will it gain before it does and when will that take place? Right now we have buy signals in the S and I Funds where we are invested. We will stay put until those charts tell us otherwise. No doubt, bonds are looking better, but that can turn on a dime if the FED Tapers QE III very much. After all, what has the FED been buying but bonds? I’m looking for some kind of bounce tomorrow. We’ll see what happens and go form there. God bless and have a great evening!
Scott8-)

 



Written By

Scott Grimes

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