Good Evening, Today the S&P and Dow both dropped over two percent. Of course you have all the usual folks out there saying ” the sky is falling, the sky is falling”. Well they must not have been trading longer than two years because this stuff was the norm before that. I’ve seen the market sell off 5% in a day! It’s called volatility, get used to it! As you might imagine I received a lot of messages today. I understand, I truly do, but lets break this thing down and put it into perspective. The whole sell off is only about 3.9% at this point and the charts are way oversold and primed for a bounce. Does that mean they can’t go lower? No, but it tells us that it is likely this dip will end soon. A review of the chart for the C Fund, better known as the S&P 500 shows was that the Williams %R which is our overbought oversold indicator is way oversold. If you go to the chart below you can easily see that the last time the Wms%R was this oversold the stock price bottomed. You ask does this mean it definitely can’t go lower. Again no, it means that it likely will not go lower or at least much lower. How much lower you say? My experience has been that the average dip in a normal healthy market is in the 5 -7% range. For those of you with inquiring minds the technical definition of a correction is downtrend of 10% or more and the definition of a bear market is a downtrend of 20% or more.  As you can plainly see, we are nowhere near those levels yet. You very seldom get a chance to sell before that 5 to 7% range and if you do it is my experience that you will usually lock in rather than prevent a loss. There are times when it may be appropriate to sell at that level but they are few and far between and require the use of many additional indicators. Also while we are on the subject, there are different rules and indicators that are utilized in bull and bear markets. Right now we are still in a bull market. therefore those rules and indicators apply. Without getting into the specifics because it would take a text book to do it I will say that those rules and indicators are more generous and give price a greater chance to rebound from dips before exiting a position than there would be during a bear market. That is necessary to prevent us from exiting a position prior to a rebound in the market. In the case of bear market indicators, they sell quickly because the expectation during a bear market is that it will go lower. Conversely, the expectation during a bull market is that it will reverse and go higher. And that is where we find ourselves now. Remember, if you followed this blog you all made a nice gain of over 19% in 2017. You still have that gain and will keep all or most of it even if the market continues lower into a bear market which my indicators tell me it is unlikely to do. So where are you at Scott? What do you think? I am not a prognosticator. I am a reactive trader!! But if you force me to tell you what I think I will. I believe this market will reverse and we will make further gains before May. Personally, as of the writing of this blog I have sold nothing. You will know when I do. One more thing and I’ll get off this subject. I encourage you to read all the blogs leading up to this one. It will give you a way better feel for where we are at and why we got here. Now on to today. What actually happened?  The U.S. Labor Department reported employment grew more than expected in January with the biggest wage gain in more than 8-1/2 years. The picture of workers commanding higher salaries fueled expectations that inflation is on the rise, which could prompt the Federal Reserve to take a more aggressive approach to rate hikes this year. That’s it. There’s really nothing to add other than what we discussed in previous blogs. The bottom line is that the economy is improving and as it gets stronger the Federal Reserve will increase interest rates to keep inflation under control. So what is different this time?? Nothing, absolutely nothing other than the fact that the normal cycle hasn’t occurred for a long time due to quantitative easing. That’s over now and things are back to normal. You can get used to them or sit on your cash but as the old saying goes “You have to be in it to win it”. One last thing before I move to the results: Never forget that God was with this group for the last two bear markets and those of you who have been with me from the start know what He did for us. Keep giving Him praise!!!

The days selling left us with the following results: Our TSP allotment fell -2.12%. For comparison, the Dow lost -2.54%, the Nasdaq -1.96%, and the S&P 500 -2.12%. There was quite simply no place to hide.

The days action left us with the following signals: C-Neutral, S-Neutral, I-Neutral, F-Sell. We are currently invested at 100/C. Our allocation is now +2.42% on the year. Here are the latest posted results:

Now lets take a look at the charts. All signals are annotated with green circles. If you click on the charts they will become larger.

C Fund:

S Fund:

I Fund:

F Fund: See the green circles? That’s where we sold this one.

Don’t be nervous! You can easily sell when and if it comes time to do so. God is with us! He has never forsaken this group. That’s all for this week. Enjoy the weekend and do something fun. This sell off will be over before you know it and if for some reason it continues there’s always somewhere to invest your capital. You can cross that bridge when you get to it and I don’t think it will be as soon as you think! Have a great weekend and I’ll see you on Monday!

God bless, Scott