Good Evening,

At last, we had a positive day. Stocks rose today on good housing news and as a result both TSP and AMP posted badly needed gains. The day’s bounce will definitely keep us in the game, but there is something to be aware of: So far in 2014 there have been three pull backs. The first was in early January followed by one in April and then one in August.  In all three cases, we had a large failed bounce before we found support and moved to new highs. There were a few days of poor action just like the ones that started this week and then we rolled over again. The second pull back then set us up for what has now become the standard V- shaped bounce. Today’s bounce went right along with that pattern. If the pattern plays out for a fourth time then this bounce should last a few days before we pullback again sometime next week. That will shake out the uncommitted bulls and set us up for another nice run. The market usually isn’t predictable, but this pattern has been the same in all three pull backs noted earlier. It was way too consistent not to notice. We’ll know for sure if the next bounce succeeds. However, if it does not, Katy bar the door!! That would break the pattern! We’ll see. 

Markets Close on a High Note

 

The day’s action left us with the following signals: C-Neutral, S-Sell, I-Sell, F-Sell. We are currently invested at 60/G, 40/C. Our allocation is now -5.77% on the year, not including today’s gains. 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%

Let’s feature the S Fund today, since it’s taken the hardest hit. Chart courtesy of Stockcharts.com.

The S Fund is now trading in an established descending channel. Today’s move up was still well within the upper and lower resistance of the channel. The chart remains in solid sell signal and is currently trading below its 100 EMA. The overall EMA configuration is still OK, but the 20 EMA is now threatening to cross though the 50 EMA which would be a clear signal that this fund is suffering further deterioration. Overall lower resistance in now set at 83.00. Should that be broken, the next stop down would be near the May low of 80.0. The PMO remains in a free fall and is now crossing into negative territory. It is not yet oversold so there is still plenty of room to fall. The Williams %R is giving and ultra short term buy signal as a result of today’s positive action. Taking a close look at the chart, I would expect that this fund will eventually test resistance at 83.00 and rally from there. If I had to guess on a time frame, I would say that will occur some time next week. However, that is just a guess.

As I look at the charts across the board, I believe that the decline is not over. That said, I believe that the charts are setting up for a very nice rally sometime in the coming weeks. The trick will be to keep enough powder dry to get the most out of those gains when they come. How we navigate the coming days will determine how much we profit from that run, if it indeed materializes. As usual we’ll read our charts and pray that God will guide our hand as we do it. He has never let us down before and I’m sure he will guide us into the new year with a bang. Give Him all the praise!!! That’s all for tonight. Have a great evening and enjoy this wonderful fall weather while it lasts.

God bless,

Scott