09/16/14

Good Evening,

Stocks were up, bonds were down, and precious metals bounced back. Is it the initiation of a new run or a bull trap? Although most of us expect the FED language to support the market, there’s really no way to safely know which way the market is heading until after the FED statement is actually made. There was a lot of talk today that the run up was due to hedge funds buying back shares they had sold in the last few days to make room for the highly anticipated Alibaba IPO that is coming on Friday. The train of thought is that many of the big hedge funds didn’t get as large an allotment of Alibaba shares as they had hoped, so they are re-buying shares of stock that they previously sold to raise cash for Alibaba. I find it hard to believe that is enough to completely fuel a run like we had today. I also wonder why traders jumped on board today ahead of the announcement. After all, gains made today could quickly evaporate tomorrow. It appears that they did so based on the interview of a Wall Street Journal reporter who covers the FED that hinted at dovish comments to be made by the FED tomorrow. I’m not even comfortable enough to bet my own money on a rumor, let alone anyone else’s. As I said, we’ll know tomorrow at 2:00 PM eastern time. As far as our investments, TSP managed to gain back some of the ground it gave up yesterday, while AMP held steady. On to the news…

 

Stocks End Higher Despite Mixed Fed Messages

 

The day’s action left us with the following signals: C-Neutral, S-Neutral, I-Sell, F-Sell. We are currently invested at 40/C, 60/S. Our allocation is now -4.58% on the year, not including today’s gains. Here are the latest posted results:
09/15/14 Prior Prices
Fund G Fund F Fund C Fund S Fund I Fund
Price 14.5238 16.4159 26.0208 35.184 25.9444
$ Change 0.0025 0.0157 -0.0182 -0.3336 -0.0450
% Change day +0.02% +0.10% -0.07% -0.94% -0.17%
% Change week +0.02% +0.10% -0.07% -0.94% -0.17%
% Change month +0.09% -1.00% -0.87% -1.99% -1.34%
% Change year +1.66% +4.28% +8.99% +4.49% +1.49%
  L INC L 2020 L 2030 L 2040 L 2050
Price 17.2896 22.7021 24.5772 26.1171 14.8321
$ Change -0.0045 -0.0254 -0.0401 -0.0542 -0.0355
% Change day -0.03% -0.11% -0.16% -0.21% -0.24%
% Change week -0.03% -0.11% -0.16% -0.21% -0.24%
% Change month -0.23% -0.63% -0.83% -0.98% -1.09%
% Change year +2.81% +4.16% +4.77% +5.17% +5.47%
Here’s what the SPY looked like today: Chart courtesy of Stockcharts.com with analysis by Erin Heim.
“Expectation had been that we would see more consolidation as the market waited with bated breath for the Fed policy meeting remarks. Instead dovish rumors were released and price broke out. There was a short-term descending wedge in place with the expectation of a breakout. Price will hit overhead resistance if we see similar market action tomorrow. The PMO which just had a negative crossover has paused. Interestingly, volume on the SPX was unimpressive for such an “exciting” trading day.”
“Conclusion: Indicators are definitely not as negative as they have been, but overall they are still bearish. The interest rate euphoria will likely drive the bus for at least another day, but if investors sober, the decline should return. “
You know, there is a lot of speculation out there about how the market will react to tomorrow’s FED statement. I think today is a nice reminder of how Mr. Market can throw us a curve ball. The market did exactly what our analysis predicted it would do. Only problem is that it happened one day before we thought it would. So, if we pile on now will we get some gain? The answer for TSP is obvious as we are already there. We’ll just see how far it goes. Now AMP is another question. The worst thing that will happen with our defensive allotment is that we will get on the bus late and miss a few gains. One thing that we know for sure that will happen is that we will not lose a penny while we wait for buy signals to reappear in our equity based investments. The prudent money manager will not always win the day, as to do so requires him to take too many chances, but he will win in the long term every time. So it is always best to stay disciplined and not to rush into anything without the proper signals. As I said yesterday, we’ll wait for the market to make a confirmed move and then we’ll make ours in TSP and in AMP. That’s all for tonight. Pray that God will guide our hand tomorrow! Have a nice evening.
God bless,
Scott8-)

 

 



Written By

Scott Grimes

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