Good Evening,
Our analysis was solid. Now we just need to let everything play out and read our charts for the next move……What we need to realize right now is that the market is undergoing a correction and we need to stay defensive while it plays out. The biggest mistake traders make in an environment like this is to try to call the bottom. You don’t need to time the exact low to make money. You simply need to focus on protecting capital and then get back in as the price action improves. There will be plenty of opportunities to make money after things improve. There is no need to time the bottom with great precision.
NEW YORK (CNNMoney)
At least Wall Street avoided another scary sell-off.
The day’s action left us with the following signals: C-Sell, S-Sell. I-Sell, F-Neutral. We are currently invested at 25/G, 75/F. Our allocation is now -6.20% on the year not including today’s results. Here are the latest posted results.
| 08/05/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.4864 | 16.4464 | 25.1037 | 34.1844 | 25.9612 |
| $ Change | 0.0010 | 0.0036 | -0.2430 | -0.1666 | -0.0964 |
| % Change day | +0.01% | +0.02% | -0.96% | -0.48% | -0.37% |
| % Change week | +0.03% | +0.09% | -0.25% | +0.21% | -0.67% |
| % Change month | +0.03% | +0.29% | -0.53% | -0.03% | -1.42% |
| % Change year | +1.40% | +4.48% | +5.15% | +1.53% | +1.55% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.1692 | 22.4004 | 24.1744 | 25.6311 | 14.53 |
| $ Change | -0.0245 | -0.0811 | -0.1116 | -0.1352 | -0.0860 |
| % Change day | -0.14% | -0.36% | -0.46% | -0.52% | -0.59% |
| % Change week | -0.03% | -0.14% | -0.18% | -0.19% | -0.23% |
| % Change month | -0.09% | -0.34% | -0.43% | -0.49% | -0.58% |
| % Change year | +2.10% | +2.77% | +3.05% | +3.21% | +3.32% |
As far as today, our TSP allotment pretty well broke even and those involved in the AMP program made a gain of +0.105% which was again good enough to best the Dow, S&P, and Nasdaq. Our defensive posture is paying dividends thus far.
The TSP equity based funds are all still showing sell signals. Here’s what the C Fund looked like to day. Charts Courtesy of Stockcharts.com.
Though it’s hard to believe by looking at it, the C Fund has the best chart of all our equity based funds. Of course it is currently giving a solid sell signal. The 5 EMA has passed though the 20 and 50 EMA’s and is now threatening the 100 EMA which tells us that the short term trend is down. The 20 EMA has currently turned down but is still a long way above the 50 EMA. Should it continue to and break through the 50, the intermediate term trend would also be down. Worth noting is that the 20 has already crossed though the 50 EMA on the I Fund Chart and is close to doing so for the S Fund. I will show those charts as well below. Volume was average and the PMO continues in a free fall as it enters neutral territory. It still has a lot of room to fall before it will have pressure to turn up. We will watch for this indicator to bottom before we will give any serious consideration to this fund.
The S Fund is a solid sell signal and is threatening to get worse as the 20 EMA is now threatening to breach the 50. That would be very bearish if it does. As you can see it remains solidly within the downward trading channel that we annotated a few days back. This is bearish. The PMO is entering oversold territory, but still has a little room to fall before it encounters resistance.
The I Fund is even worse as the 20 EMA has already passed through the 50 validating an intermediate term down trend. This chart has a lot of damage to repair before we could consider investing in the I Fund. Also of note, the PMO is in absolute free fall as it is on the other charts.
The PMO is nowhere close to bottoming on any of our equity based funds which tells me that it is likely that this correction will continue. Remember one thing about corrections is they come in all flavors. You can lose a lot at once to be sure, but more often than not, it nickels and dimes the market players to death until they capitulate, give up and get out. Prior to the easy FED money, that’s how corrections found the bottom. It’s yet to be determined if that will be the case this time. My best guess is that it will fall somewhere in between normal and where it has been for the past 5 years due to the fact that, while reduced, there is still some FED money out there. Whether that will give us a 10% correction this time around, I really can’t say. The situation in Ukraine is providing substantial headwinds as well so I certainly wouldn’t bet against a real correction (10% or more). Either way, I will watch the charts and do what they say. Right now, they are not very good so I am happy to be where we are. Keep praying and God will see us through this correction! Have a great evening. God bless,
Scott 
