Good Evening,
The market popped on a better than expected jobs report with a drop in unemployment. Even at that, it was a down week for the major indices. Is this the bottom of the current dip or is it a classic bear trap? Only time will tell, but we’re not going to chase. The charts have some damage to repair before it will be safe to jump back into the water….. TSP and AMP only recorded slight gains on the day as they are both very defensive at this time. There will be plenty of time to get back in if we are heading up so there is no hurry.
The week’s action left us with the following signals: C-Sell, S-Sell, I-Sell, F-Buy. We are currently invested at 100/S. Our allocation is now -5.82% on the year not including today’s results.
| 10/02/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.5383 | 16.5364 | 25.5446 | 33.7335 | 24.6563 |
| $ Change | 0.0010 | -0.0198 | 0.0021 | 0.1670 | -0.4253 |
| % Change day | +0.01% | -0.12% | +0.01% | +0.50% | -1.70% |
| % Change week | +0.04% | +0.42% | -1.82% | -2.19% | -3.04% |
| % Change month | +0.01% | +0.31% | -1.31% | -0.98% | -2.52% |
| % Change year | +1.76% | +5.05% | +6.99% | +0.19% | -3.55% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2067 | 22.351 | 24.0768 | 25.4944 | 14.423 |
| $ Change | -0.0123 | -0.0491 | -0.0642 | -0.0726 | -0.0493 |
| % Change day | -0.07% | -0.22% | -0.27% | -0.28% | -0.34% |
| % Change week | -0.39% | -1.12% | -1.45% | -1.67% | -1.92% |
| % Change month | -0.28% | -0.81% | -1.03% | -1.18% | -1.36% |
| % Change year | +2.32% | +2.55% | +2.63% | +2.66% | +2.56% |
I’m sure many people are feeling better about the market today. Personally, I would like to see some more down side. Let’s take a look at the S Fund, as it probably gives the best over all picture of where we are and where we have to go.
Chart courtesy of Stockcharts.com.
I can’t get this all on one chart so I won’t even try. On this chart you can see the negative breakdown of the chart with the 20 EMA traveling through the 50 and 100 EMA’s. We consider a chart to be in bear market mode when the 50 EMA (that’s the green line passes through the 200 EMA (that’s the purple line). At any rate, I have annotated all the key points that make this chart a “sell”. Now lets looks at some other points on the same chart below.
I have annotated where we have to go to get a solid safe buy signal. As you see, the indicators still have a good way to travel before the buy signal takes place. The 5 through the 50 is the minimum signal that needs to happen. It would be preferable for the 20 to pass through the 50. That gives you a good idea of where we have to go to repair the damage that has been done during this downturn.
Today we had a really nice bounce, but one bounce doesn’t make a trend. As you can clearly see on the chart above, a lot of movement has to take place before we will get back to an upward trend. Small caps were the first to be hit so they will probably be the first to recover. We’ll keep watching the chart for the things we noted above. Should we get a buy signal in the larger caps (The C Fund), we will hang out there until things improve in the S. I wouldn’t be surprised to see some more downside first. We’ll just watch the charts and take what they give us. That’s all for this week. See you on Monday!
God bless,
Scott
