Good Evening,
No V Shaped bounce this time. I wonder if the buy-n-holders out there are starting to feel the pain? This is definitely acting like a normal market. Has its character changed enough to call is 100% normal? The jury is still out on that one. We’ll need a little more “evidence”. However, things are sure different at this point than they have been since 2009. It’s true, the market is declining and a lot of money is being lost, but as the market declines it is setting up new buying opportunities for the future. The more it declines, the more money we will make when it bottoms out. As I said yesterday, I do not think this is the big one. I still look for the current decline to bottom soon and for the market to rally into mid December. The picture gets somewhat unclear after that and is probably dependent on what the FED does concerning interest rates. We’ll cross that bridge when we come to it. For now we are in the right place at 100/G in TSP and mostly cash in AMP. To borrow a term from Revshark, we’ll invest like sharks and circle until there’s blood in the water. Then, when it bottoms we’ll head back in with everything we’ve got. We must monitor our charts from this point on to that end…
James DePorre “RevShark”
“It was all around ugly day for the market but what many market observers don’t recognize is that the major indices are just starting to catch up with the very poor action that has been occurring in small caps for quite a while. Small caps have lost around 11% since the start of the third quarter while the senior indices are close to even.Part of the reason that this has occurred is that small caps tend to be more interest rate sensitive and they also tend to react faster to perceived economic weakness. Both those issues are starting to become more prominent and that is causing money to flow out of the riskier small caps and into more conservative and defensive names which are members of the S&P500 and DJIA.Another reason that small caps have underperformed so dramatically is computer algorithems that have be designed to exploit the negative correlation. The nature of the market these days is for the computer programs to find these sorts of inconsistencies and then push them even further. We often seen it to the upside when we have V-shaped moves but recently the short small caps, long big caps has been the ‘go to’ trade for the computers.The bigger and more important issue is whether this disconnect suggests that big caps are likely to play catch up to the downside. Unfortunately that does tend to be the tendency. While big caps are a safe haven to a degree there isn’t much loyalty when they start to trade down. The money that has moved from small caps to defensive big caps is much more likely to move to the sidelines rather than into equities of a different stripe.At this point well over half of the stocks in the Russell 2000 are down over 20% which means they are already in a bear market. It does create a gravitational pull for the wider market and the chances that the number of stocks that have deep corrections of 20% or more is growing.The most important thing to keep in mind as you contemplate this market is that we have undergone a change in character. The V-shaped bounce has not occurred and the bulls were burned badly when they tried to anticipate one.We are now oversold enough for a decent bounce but don’t be too quick to assume that this correction has come to an end.”
| 09/30/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.5365 | 16.4855 | 25.8829 | 34.069 | 25.2928 |
| $ Change | 0.0008 | -0.0034 | -0.0706 | -0.3637 | -0.0280 |
| % Change day | +0.01% | -0.02% | -0.27% | -1.06% | -0.11% |
| % Change week | +0.02% | +0.11% | -0.52% | -1.22% | -0.54% |
| % Change month | +0.18% | -0.58% | -1.40% | -5.10% | -3.82% |
| % Change year | +1.75% | +4.73% | +8.41% | +1.18% | -1.06% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2557 | 22.5333 | 24.3282 | 25.7986 | 14.6217 |
| $ Change | -0.0115 | -0.0405 | -0.0598 | -0.0774 | -0.0492 |
| % Change day | -0.07% | -0.18% | -0.25% | -0.30% | -0.34% |
| % Change week | -0.10% | -0.31% | -0.42% | -0.50% | -0.57% |
| % Change month | -0.42% | -1.36% | -1.84% | -2.18% | -2.50% |
| % Change year | +2.61% | +3.38% | +3.70% | +3.88% | +3.97% |
