Good Evening,
The FED money has departed and our system has returned. Now that the FED Fog is gone we can again see clearly! The market sold off in a major way today, but our TSP allotment held steady and AMP managed to hold onto 30% of yesterday’s gains. Both systems are still up on the week! Now lets see what today’s excuse was…
Extreme turbulence: Stocks suffer steepest drop of 2014
The day’s action left us with the following signals: C-Sell, S-Sell, I-Sell and F-Buy. Thank God we are currently invested at 100/G. Our allocation is now -5.78% on the year not including today’s results.
| 10/08/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.544 | 16.6361 | 25.8531 | 33.8122 | 24.7817 |
| $ Change | 0.0010 | 0.0240 | 0.4523 | 0.4925 | 0.2850 |
| % Change day | +0.01% | +0.14% | +1.78% | +1.48% | +1.16% |
| % Change week | +0.03% | +0.61% | +0.09% | -0.67% | +0.91% |
| % Change month | +0.05% | +0.91% | -0.12% | -0.75% | -2.02% |
| % Change year | +1.80% | +5.68% | +8.28% | +0.42% | -3.06% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2486 | 22.4583 | 24.2185 | 25.6609 | 14.526 |
| $ Change | 0.0561 | 0.1772 | 0.2445 | 0.2975 | 0.1891 |
| % Change day | +0.33% | +0.80% | +1.02% | +1.17% | +1.32% |
| % Change week | +0.10% | +0.15% | +0.16% | +0.16% | +0.17% |
| % Change month | -0.04% | -0.33% | -0.45% | -0.53% | -0.65% |
| % Change year | +2.57% | +3.04% | +3.24% | +3.33% | +3.29% |
I assure you, all those gains were wiped out today with the exception of the G Fund! The pain was broad and deep with all of our equity based TSP Funds losing in excess of 2%.
Lets take a look at the SPY. They are rating it at Neutral, but my indicators already have it at a sell. In this case mine are the best! Chart by Stockcharts.com with analysis by Erin Heim of Decision Point.
“The signal finally came as the 20-EMA crossed below the 50-EMA to generate a Neutral signal and close out a BUY signal from 2/11/14. It is a .06 difference between the 20/50-EMAs which could leave us open to whipsaw. The PMO is now reached oversold extremes. Looking at the $SPX volume bars, the last four major highs were on down days, this is bearish.”
“Conclusion: This is why doing daily analysis is so difficult. A week like this that has such volatility and direction changes day-to-day, make a market timer’s job tricky. We had a signal change to a Neutral on the SPY which is very bearish, but sometimes these Trend Model signals come late to the party. The 20/50-EMAs are vulnerable to a whipsaw signal change and with the market being so directionless, we could see a few. Indicators are bearish, but not overly bearish (unless you consider the ultra-short-term indicators as an initiation). Price action tomorrow will hopefully give us a direction.“
I think highly of Erin and Carl’s analysis. I believe they are among the best in the business. I also have a lot of faith in the indicators that we use. It took years to develop them and at least in this case they have proven superior to all the others I am aware of. We received our sell signals early and without a delay or whipsaw. Yes, now that most of the FED noise is gone we are receiving clear and accurate signals. All we have to do is run the system that God gave us and we will be fine. Our strategy right now is to watch our charts for the initiation of a new rally and find a good entry point when it occurs. Also, as I mentioned yesterday, not to get too impatient and jump back in before we have a clear signal. Sometimes that can cost us a point or two. Getting in too early is more likely to expose you to a reversal and unnecessary loss. Giving up a few points to be sure of the news trend is just good insurance against such a loss. That’s all for tonight. May God be praised for sheltering us from today’s extreme losses! Have a nice evening.
God bless,
Scott
