Good Evening, A lot of folks are asking me if it’s a good time to buy. First and foremost I will tell you that know one knows the future. All we can do is minimize risk based on the current information that we have. There is little doubt that the market has been hot for the past six days. I can’t argue with that. The current rally started with a presidential tweet on Sunday of last week saying that an immigration deal had been reached to avert a 5 percent tariff that was to be placed on Mexican goods the next day. The market was off and running for six days until today when it gave up it’s early gains to finish flat. Another thing that spurred that market on was a bad jobs report this past Friday. How can a bad report fuel a rally you ask? Investors took the bad jobs report as a sign that the Federal Reserve which meets next week would have to cut interest rates. The thought is that if they do not cut rates this month then they will surely have to next month. Alright, the Mexican deal was a tangible event. But lets get real for a moment. The whole crisis which some say was manufactured only lasted about a week. So what about the rest of the miserable month of May? What made the stocks drop and has it changed as well?? The issues that caused the market to drop in the first place were the trade war with China and it’s effect on the World economy. Remember what we discussed earlier that all roads lead to the trade war. So what has changed?  Why should we continue to rally now? That answer would be nothing tangible! The current rally is based on hopes that some things will happen and the fear of being left behind. Lets take a brief look at the issues. #1 The Chinese trade war. There is currently no agreement but the market is rallying on the hope that Presidents Trump and Jinping will meet at the G20 Summit in a couple of weeks and that a trade agreement will be reached as a result. The whole thing seems to be a stretch at the moment. The Chinese government hasn’t even acknowledged that the presidents will meet and made a statement today that they aren’t afraid of a trade war. At best if the two presidents do meet the best we can hope for is an agreement to renew talks. That’s hardly anything I want to bet my portfolio on! #2 The Fed will come to the rescue on cut interest rates. I believe this is the most likely of the two scenarios to take place but will it take place next week? Probably not as odds makers have currently put only a 27% chance on a rate cut. However, that same chance increases to the neighborhood of 75% for July. So where does all this mess leave us? I agree that the charts are looking better but I have some serious reservations that the market can hold on to the current gains unless something changes. The big problems I have with this rally are that it is based on hope and emotions and not on anything tangible. Can that change? Sure but are you willing to bet on it until it does. There are two questions you can ask yourself and you should have your answer. The first question is what do you think will happen if the Fed doesn’t cut rates on the 19th?? And second is what do you think will happen if there is no trade agreement at the G 20 summit? My bet is you won’t want to be in the market. You can always buy after one of the two events becomes tangible. If you have been closely or even loosely following our allocation you are sitting on a nice profit for 2019. If the market drops as a result of either of these events you could conceivably lose all are part of the profit and while you might make that back there is no less productive time spent than that of making up for a loss. You know our mantra here. It’s not what you make that’s important. It’s what you keep! And I just don’t like the current odds. This is retirement money not mad money! Lose it and your whole life changes. So why be greedy. Make your money when it’s safe to make it. Let the others try to get rich and secure your future. If you do that you might just accomplish both things in the end. A whole lot of folks in Thrift have! Here’s the bottom line. The charts will allow you to get back into stocks now if you choose to do so and I certainly won’t blame you if you do. But I’m going to wait and see how this all plays out. Why??? I have two big issues with this rally. The first is that it’s based on things we hope will happen and not what has actually happened. Also, it’s based on emotions, the fear of begin left behind. Second, The Volatility index better known as the VIX is still at 16. As I have said, I don’t trade off the VIX, but I do use it as a measure of risk and anything at or above 16 is too high. Should we get either a trade agreement with China or a rate hike with the Fed or both and the VIX drops and stays below 16 I will get back into equities. However, if none of that takes place then it’s bonds for me!

The days trading left us with the following results: Our TSP allotment was flat at -0.02%. For comparison, the Dow was likewise flat at -0.05%, the Nasdaq -0.01%, and the S&P 500 -0.03%.

The days trading left us with the following signals: C-Buy, S-Neutral, I-Buy, F-Buy. We are currently invested at 100/F. Our allocation is now +11.84% for the year not including the days results. Here are the latest posted results:

I Fund:

God bless, Scott 

 

 ***Just a reminder that you can review the performance of our allocation at the Web Site TSPTALK.com in the autotracker section under the screen name KyFan1.

 

 

I produce and publish this blog as both a ministry and for the benefit of any Federal Government Employee. This is done to offer you some guidance as to how to approach your retirement more financially successful. When it is time for you to retire, I recommend you utilize the services of a Professional Money Manager, who works with a reputable investment firm. He understands the guidance you have already received and he can manage your savings assets utilizing a more advanced investment program into the future. 

 

If you would like to receive more information about this introduction, please feel free to contact me at  [email protected].