Good Evening,
This type of market is definitely not any fun to trade. It went back up today on decent news, but is it playing out the head and shoulders scenario that we have been tracking on our charts?
Stocks bounce back as earnings impress
The day’s action left us with the following signals: C-Sell, S-Neutral, I-Sell, F-Buy. Our current allocation is 10/G, 90/F. It is -2.74% so far on the year. Here are the latest posted results:
| 01/29/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.3154 | 15.9864 | 22.9418 | 32.7233 | 24.7026 |
| $ Change | 0.0010 | 0.0471 | -0.2340 | -0.3819 | -0.1341 |
| % Change day | +0.01% | +0.30% | -1.01% | -1.15% | -0.54% |
| % Change week | +0.03% | +0.28% | -0.88% | -1.22% | -0.66% |
| % Change month | +0.20% | +1.56% | -3.91% | -2.81% | -3.37% |
| % Change year | +0.20% | +1.56% | -3.91% | -2.81% | -3.37% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 16.7351 | 21.4294 | 22.9459 | 24.2053 | 13.6554 |
| $ Change | -0.0270 | -0.0956 | -0.1326 | -0.1628 | -0.1038 |
| % Change day | -0.16% | -0.44% | -0.57% | -0.67% | -0.75% |
| % Change week | -0.13% | -0.42% | -0.55% | -0.65% | -0.74% |
| % Change month | -0.48% | -1.68% | -2.19% | -2.53% | -2.90% |
| % Change year | -0.48% | -1.68% | -2.19% | -2.53% | -2.90% |
With today’s gains (not shown) the head and shoulders pattern we have been tracking is alive and well:
Yesterday’s SPX closed below the support line drawn from the May top, but it remained above the line drawn from the December low.
Today’s gains could be the initiation of the right shoulder of the pattern. Should the right shoulder form and the pattern execute, the chart will break below the neckline. I would target the next level of support at around 1,700. That is the reason I’m not very bullish at this time. Also, let’s include the intangibles. This market just does not feel like it did for the past two years. It has been wrong not to be bullish after a day like this even if the charts were technically broken. My feeling is that today’s advance was little more than an oversold bounce and we are not going to continue up as easily as we did during the past 24 months. This market is not the one for blind bullishness. It’s true, the FED is still purchasing bonds, but those purchases have been reduced by 20 billion per month so any advantage that they have created is starting to diminish. Things are different now than they have been in the recent past and we must treat them differently. Am I sounding the alarm? Maybe. With an extended market and an ominous pattern forming on the charts, I will be real surprised if yesterday’s pull back was the end of the selling. We must keep praying that God will continue to guide our group. This is a difficult market right now. It is a market that appears to be in transition. How long will that transition last? If you know the answer to that question you can go on CNN and talk about it. After all, everyone else is and I will put my trust in none of them. I will continue to depend on the God that built my portfolio in the first place. Give Him the praise!!! For now, I will continue to play defense until the charts indicate that this down turn is truly over. Have a great evening!
God bless,
Scott 
