Good Evening,
We’ll here we go again. This market kind of reminds me of Fred Sanford having yet another big one. The selling took off and never quit. It reminds me a lot of the action back in April and May. They refer to that one as the stealth correction now as it didn’t show up in the major indices at the time. Nevertheless, it caused a lot of damage under the surface, especially in small caps. We didn’t wait, we sold first and asked questions later. Actually, we did so three times since the first of the year. Each time we were effectively whipsawed by yet another one of those V Shaped reversals on low volume. Here we are again with the same choice again. There’s no real damage in the big indices, but the picture behind the scenes indicates some more downside, at least in the short term. Eventually, the BIG correction will come, but we can’t keep calling the top. We just have to run our system and get out when and not before we have a solid sell signal. Yes, there is some loss when that occurs, but it is usually not as much as the profits that are missed when we take defensive measures too early. Unemployment and interest rates are still under control for now. The GNP is looking good and most companies are still making money. I for one, will not have a quick trigger until the FED increases the interest rates. Until then I’ll hang in there as long as I can and deal with the big one when it comes. This is just another example of the way this market is….The biggest complaint out there right now is that, while traders have a few things working, they are giving profits back on other things that suddenly stop working. The net result is a lot of churning and not much progress. That’s just the way that it is. Call it topping, call it whatever. We just have to be disciplined and run our system.
Monday threw water all over the embers of last week’s fireworks.
| 07/07/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.4603 | 16.3464 | 25.824 | 35.6489 | 26.9906 |
| $ Change | 0.0036 | 0.0260 | -0.1006 | -0.4701 | -0.1917 |
| % Change day | +0.02% | +0.16% | -0.39% | -1.30% | -0.71% |
| % Change week | +0.02% | +0.16% | -0.39% | -1.30% | -0.71% |
| % Change month | +0.04% | -0.50% | +0.92% | -0.31% | +0.49% |
| % Change year | +1.21% | +3.84% | +8.16% | +5.88% | +5.58% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2525 | 22.7654 | 24.6988 | 26.286 | 14.9579 |
| $ Change | -0.0162 | -0.0702 | -0.1030 | -0.1317 | -0.0862 |
| % Change day | -0.09% | -0.31% | -0.42% | -0.50% | -0.57% |
| % Change week | -0.09% | -0.31% | -0.42% | -0.50% | -0.57% |
| % Change month | +0.13% | +0.30% | +0.36% | +0.39% | +0.45% |
| % Change year | +2.59% | +4.45% | +5.28% | +5.85% | +6.36% |
We’ve been watching the intermediate-term rising wedge, but with last week’s breakout, that pattern appears less relevant. Using the tops and bottoms from June, I created a rising trend channel in the short term. Price actually popped slightly above it last Thursday, but it’s back inside. The slope of the trend channel isn’t that steep and it could be maintained. The PMO doesn’t know what to do with itself. It’s flat and noisy and becoming less and less useful as an indicator on SPY.
Conclusion:“On the return from the holiday, prices were lower, trading in the red all day long. Indicators are looking bearish in general. Short-term indicators are falling after to peaking early in only mildly overbought territory. Intermediate-term indicators continue to stay in very overbought territory. The next likely step for price is moving to the bottom of the new short-term rising trend channel.”
