Good Evening,
Stocks dropped today, although there really wasn’t much in the way of earth shattering news…
Tech stocks tank but finish off their lows
The day’s selling left us with the following signals: C-Neutral, S-Neutral, I-Neutral, F-Neutral. The S- Fund was ugly today with a loss of -1.05%. Could the weakness in small caps be signaling a change in the character of the market? We are currently invested at 36/C, 42/S, 22/I. The I fund did manage a gain today so it is good that we still have some funds allocated there. Our TSP allocation is now -0.96% on the year. Of course, our fund on the street is still in the green thanks to precious metals and bonds! Here are the latest posted results:
| 03/21/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.361 | 16.023 | 24.226 | 34.916 | 25.0623 |
| $ Change | 0.0009 | 0.0274 | -0.0715 | -0.1268 | 0.0660 |
| % Change day | +0.01% | +0.17% | -0.29% | -0.36% | +0.26% |
| % Change week | +0.04% | -0.43% | +1.38% | +0.94% | +0.14% |
| % Change month | +0.13% | -0.42% | +0.49% | +0.27% | -3.25% |
| % Change year | +0.52% | +1.79% | +1.47% | +3.70% | -1.96% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 16.9349 | 21.9688 | 23.6703 | 25.0834 | 14.2031 |
| $ Change | -0.0031 | -0.0128 | -0.0194 | -0.0251 | -0.0155 |
| % Change day | -0.02% | -0.06% | -0.08% | -0.10% | -0.11% |
| % Change week | +0.21% | +0.48% | +0.60% | +0.69% | +0.76% |
| % Change month | -0.02% | -0.32% | -0.42% | -0.49% | -0.61% |
| % Change year | +0.70% | +0.79% | +0.90% | +1.00% | +0.99% |
Now let’s read the tea leaves…..
We’ll take a look at the S-Fund today… The price broke beneath the rising wedge formation as noted with the top circle. The PMO already had a negative crossover on the 17th. Today’s dip below lower support was the fulfillment of this pattern. The question is how deep will it go? Right now it is stalled at lower resistance established at the March 1st low. Should it break below that, the next level of resistance would fall around the 81 level. As we have repeatedly discussed, we aren’t sure at what level of the FEDS artificial support that the resistance will give way to a larger correction. That noted, I would favor a bounce at this time as the FED is still buying 50 billion in bonds per month. Of course that’s just a guess. Nobody knows for sure when the levee will break. We just need to be ready in case it does. Trying to call the market top has cost the bears a lot of money for the past three years.
RevShark (James DePorre) made some interesting comments that went along with my observations:
03/24/14 4:12 PM: Afternoon Comments
At was one of those days where you would be completely mislead about the action if you just looked at the DJIA. There was some carnage under the surface as biotechnology and momentum names were dumped with abandon. There wasn’t any clear catalyst for the selling but the momentum money tends to sell first and ask questions later.What lead the market today, and helped to hold up the indices, were big cap names like PG, WMT, MCD and other big caps that are perceived as being defensive names that will hold up relative well in a weak market. That doesn’t mean they will go up but funds will part money in these names so they can stay invested and not worry about momentum selling.What is most notable on my screens is how much worse the breadth is than the overall markets. Overall breadth was a bit worse than 2 to 1 negative but on my screens it is closer to 10 to 1 negatives. My screens are mostly comprised of high momentum stocks and speculative names that have lead the market since the first of the year. Many of these stocks were taken out and shot although some did manage to bounce back a bit as the day progressed.The pattern has been that the market shakes off this sort of selling and comes back very quickly but I’m not inclined to load up on longs when we have some many breakdowns in stocks that were recently leading. We could easily see another V-shaped bounce but this action has a different feel to me today and I’m concerned about more downside action. The big money is obviously rotating and that is something we haven’t seen happen previously.
Even the best analysts, despite what some would claim, can’t predict the exact outcome of things to come. Don’t even listen to those that say they can. What I do and what the RevShark does is more like a windsock. We tell you the general direction that the winds blowing and when it might change. It’s up to you to be prepared and to react. With God’s help, that is always possible. Give Him the praise!!! That’s all for tonight. May God continue to bless your trades.
Scott
