Good Evening,
Back in the zone…. It was a volatile week for investors, but it ended on a high note. Stocks bounced back late in the day Friday, though the advance was not enough to push the Dow Jones industrial average into positive territory for the week.
“The S&P 500, which rose above 1,900 for the first time Tuesday, ended almost exactly where it started the week. The Nasdaq had the biggest gain Friday, helping the index notch a small win for the week. Meanwhile, the bond market has been on a tear. The yield on the 10-year note fell to a 6-month low below 2.5% Thursday as investors expect the Federal Reserve to keep interest rates low for a considerable time. Recent economic data has been mixed, and reports released Friday added to concerns about the lackluster recovery. An early reading on consumer sentiment in May unexpectedly fell, but a report on new home construction in April was strong. The European Central Bank is also expected to introduce new stimulus measures soon as the euro area economy remains weak and inflation is tame. Indian stocks soared. The nation’s benchmark Sensex index surged to a record high as early election results suggested a sweeping victory for Narendra Modi and the pro-business Bharatiya Janata Party. Other Asian markets and European markets both ended the day mixed. “
The week’s trading left us with the following signals: C-Neutral, S-Neutral, I-Buy, F-buy. We are currently invested at 08/G, 92/F. Our allocation is now -2.94% on the year not including today’s results. Here are the latest posted results:
| 05/15/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.4122 | 16.3533 | 24.365 | 33.2211 | 26.2798 |
| $ Change | 0.0009 | 0.0228 | -0.2256 | -0.2414 | -0.1382 |
| % Change day | +0.01% | +0.14% | -0.92% | -0.72% | -0.52% |
| % Change week | +0.04% | +0.56% | -0.34% | -0.55% | +0.50% |
| % Change month | +0.10% | +0.88% | -0.52% | -1.50% | +0.51% |
| % Change year | +0.88% | +3.89% | +2.05% | -1.34% | +2.80% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.0309 | 22.1395 | 23.8476 | 25.2476 | 14.3022 |
| $ Change | -0.0245 | -0.0861 | -0.1192 | -0.1457 | -0.0934 |
| % Change day | -0.14% | -0.39% | -0.50% | -0.57% | -0.65% |
| % Change week | +0.03% | -0.01% | -0.04% | -0.07% | -0.09% |
| % Change month | +0.04% | -0.11% | -0.19% | -0.27% | -0.33% |
| % Change year | +1.27% | +1.58% | +1.66% | +1.67% | +1.70% |
Today’s S&P close of 1877.86 puts us solidly back in our 1840-1890 trading zone. Anyone surprised? We could easily challenge either upper or lower resistance next week. There’s really been nothing resolved just yet. Here’s what the SPY looked like this week:
For the third time SPY found support just above the 50EMA, and there is a visible cycle between the last four bottoms, averaging seven days trough to trough. The implication is that SPY might take another shot at the overhead resistance. It is hard to see, but there was a PMO crossover sell signal; however, the PMO has been running pretty flat for a month, and in that configuration it is subject to whipsaw. Volume was really low for options expiration.
There’s really nothing else to add. Our defensive posture is serving us well at this time so we’ll stay put. Have a nice weekend and I’ll see you on Monday!
God Bless,
Scott
