Good Evening,
Air strikes in Syria got the market off on the wrong foot and concern over the world economy kept it that way, or at least that’s the excuse. I say the market was due for a sell off. We called it here back in August. The market declined a little at the beginning of the month and showed signs of reviving after the FED meeting, but alas, it was only a bull trap. We all thought the dip was over when the FED told the market what it wanted to hear. However, the market had a mind of its own, and that was to correct, just like we said it would. So what do we do now? Simple: we will continue to watch the charts and sell it the day they say sell and buy if they say buy. Right now, we are not 100% invested in TSP or in AMP. That means the system is working. When we get renewed buy signals, we will ride the trend back up at 100% and make larger gains than any setbacks we suffered during the decline. We just need to be patient and run our system. In the end, we will come out better for it. It’s just tough to go through a decline from any angle. Now on to the news…
Wall Street Closes Down on Geopolitical Tension
The day’s action left us with the following signals: C-Neutral, S-Sell, I-Sell, F-Sell. As of the close of business today, we are invested at 60/G, 40/C. Our allocation is now -5.77% on the year. Here are the latest posted results.
| 09/23/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.5306 | 16.4737 | 26.0109 | 34.4586 | 25.6672 |
| $ Change | 0.0009 | 0.0223 | -0.1485 | -0.2783 | -0.1624 |
| % Change day | +0.01% | +0.14% | -0.57% | -0.80% | -0.63% |
| % Change week | +0.02% | +0.26% | -1.36% | -2.33% | -1.28% |
| % Change month | +0.14% | -0.66% | -0.91% | -4.01% | -2.39% |
| % Change year | +1.71% | +4.65% | +8.95% | +2.34% | +0.40% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2788 | 22.6323 | 24.4693 | 25.974 | 14.7366 |
| $ Change | -0.0190 | -0.0705 | -0.0995 | -0.1234 | -0.0800 |
| % Change day | -0.11% | -0.31% | -0.41% | -0.47% | -0.54% |
| % Change week | -0.26% | -0.75% | -0.98% | -1.16% | -1.32% |
| % Change month | -0.29% | -0.93% | -1.27% | -1.52% | -1.73% |
| % Change year | +2.75% | +3.84% | +4.31% | +4.59% | +4.79% |
Here’s what the SPY looked like today. Chart courtesy of Stockcharts.com with analysis by Decision Point.
“Price is heading toward support along the intermediate-term trend line drawn along the February and August lows. The PMO is moving low enough that it is putting some distance between it and its 10-EMA, which will hopefully prevent another whipsaw signal.”
“Conclusion: It is clear the market is pulling back, what isn’t clear is how far and how long will it continue in a bearish trajectory. Ultra-short-term indicators suggest we could see a small bounce or pause, possibly around last week’s low. After that short-term and long-term indicators imply more decline which could put price back low enough to test support along the bottom of the medium-term bearish ascending wedge.”
How about the C Fund? Chart courtesy of Stockcharts.com.
All the indicators save the EMA’s are now in a negative configuration. The Williams % R generated a sell signal with today’s trading. Price closed right at lower resistance. We’ll see if it can break through or if it bounces back up during tomorrows session. If the 5 EMA crosses through the 50 EMA in coming days we will call it quits on this fund.
We are now in a short term down trend. Tomorrow’s trading will go a long way toward determining whether short will turn into intermediate. All of our charts, both in TSP and AMP, are starting to weaken and may generate sell signals soon if the action doesn’t become more positive. We must be vigilant and sell any chart that shows a sell signal. While we are down in the 5% range, that is really nothing compared to the 45 – 50% decline that came in the past two bear markets. We must also be disciplined and not sell a chart before it generates a sell signal, remaining cognizant of the many V Shaped bounces that have occurred during the past 5 years. The one thing to be most aware of when thinking of selling early is that if resistance fails here it would be the first time in three years that it has done so. With interest rates still so low, I wouldn’t bet on a full correction just yet. We’ll just have to see what the charts give us. Don’t forget to pray, this is a difficult time. Sometimes making the decision to sell or not to sell a day early or late can make all the difference in the world. Stay vigilant and disciplined, you have a system, stick with it. Don’t make investment decisions based on your emotions! They will always be wrong. A better way to put it might be what the Continental Commander told his troops at the battle of New Orleans “Don’t shoot until you see the whites of their eyes”. Don’t sell until you get that last signal! Rev Shark was talking about making decisions in this market today. This is what he had to say:
“One of the most difficult decisions in trading is deciding how defensive to be when the market starts to slip. If your timing is good you can produce exceptional outperformance by selling quickly at the first sign of trouble and then rebuying when the price action improves. Typically the ability to avoid the market downside is how traders end up beating the market. In recent years this sort of market timing has been very challenging. Just when it looks like the market may finally undergo a deeper correction it will reverse quickly and go straight up. This action creates a supply of underinvested bulls who then feed the upside move and help to create another V-shaped bounce. This is the primary reasons that the average hedge fund has underperformed the market the last two years.”
That’s right, its tough, but with God’s help, we’ll survive. May He continue to bless your trades! Have a nice evening.
God bless,
Scott
