Good Evening,
Well the FED used the word patient to describe their intentions to raise interest rates and the market loved it. I’m not really sure how the word patient is so much different than considerable time. I read it as a step closer to increasing rates. I believe the market interpreted the FED statement as saying they will remain accommodating as long as it’s necessary. Whatever it was, the market loved it as it is addicted to cheap money. The celebration resulted in one of the best days for the major indices since last year. Of course, we are mostly playing defense so we didn’t get the full benefit of the bounce, but we didn’t get the full force of the sell off either. Now, the question is whether or not there will be follow through. I have expected a bounce into the New Year for some time and now we will probably get it. I’m not sorry for being defensive though. Capital preservation has always been our number one priority.
While I expect some follow through, it’s far from a sure thing. The market was also cheering a bounce in oil today. However oil faded into the close and the market hardly noticed as it partied on the FED statement. So the question is will the market wake up tomorrow morning with a hangover and realize that the price of oil is still low? Will oil continue to drop? We’ll have to wait to see the answers to those questions. My guess if that the market will be a little soft tomorrow after getting fat on today’s gaudy gains. Once those gains are digested, we should see some upside into the new year. Everything will depend on oil, Europe, and the dollar. We’re betting here that the dollar will continue to rally and put pressure on commodities (especially oil). Nevertheless, we are starting to nibble at some positions in precious metals that are giving strong indications that they are putting in a bottom. The precious metals sector has been slammed in the past year and we are chomping at the bit to ride it back up. Next up: oil. we will watch it as long as it takes; it’s been absolutely murdered. Oil related stocks may be the next big money maker. We’ll see. As far as thrift, we are done for 2014. We will be 100/G for the rest of the year due to the fact that we are out of trades. I wrote here several times about how I expected a rally into the end of the year, but when my charts deteriorate and generate sell signals I must protect my capital. With only two trades per month in TSP, that comes at a price. It’s dangerous to assume there’s going to always be a bounce. It only takes one time of running down 40-50% to learn that it’s best to be careful. Those traders that rode the dot com bubble down in 2000 did not recover their funds until March of 2006. Can you afford to do nothing with your money for 5 or 6 years? The quick recoveries that have been a part of 2014 have made it a difficult year to protect your money in Thrift. The TSP system will never be able to compete with investing outside of TSP until they have more trading options, unlimited trades, and real-time trades. Don’t get me wrong, I am extremely grateful for the time I spent in TSP, but I knew that there were better returns to be had. That is the reason I created the AMP system for investing outside of thrift. That’s enough rabbit chasing for tonight! Our TSP allotment made a small gain on the day, while AMP posted a moderate gain. The important thing is they both gained ground!
Wall Street rallies after Fed statement; S&P has best day this year
The day’s action left us with the following signals: C-Sell, S-Sell, I-Sell, F-Buy. We are now invested at 100/G and out of trades for the month. Our allocation is now -3.87% on the year not including today’s gains. For those of you that follow the auto tracker, its calculation of our returns is incorrect. It calculated our returns as -0.76% for yesterday when our return was actually -0.084% as we had 80% in the G Fund and only 20% in the S. I have no idea if it will correct the mistake or not. Nevertheless, your results in the thrift system are correct and will match the -3.87% noted above if you followed this allocation to the T. Here are the latest posted gains:
