10/06/14

Good Evening,

The market started off like it was going to make some moderate gains, but ended up selling off and closing slightly down on the day. However, it should be noted that the major indices again failed to give an accurate picture of what is going on under the surface. The action is small caps was dreadful again with the Russell 2000 closing down a half a point. This market will not improve until small caps improve. Also worth noting is that small caps respond more negatively to interest rate increases as they are made up of small businesses. That is the reason that the Russell 2000 and Funds like the S Fund that are made up of a lot of small caps perform poorly when an interest rate increase is on the table. The release of the FED minutes from the last FED meeting will be on Wednesday and there’s the usual apprehension about any language in the minutes concerning a possible interest rate hike. Ho Hum, can you hear me yawning. What do these people expect? Don’t they know that if the FED increases rates that it will be doing so because the economy is getting stronger? What happened to the days when a good economy and good earnings were what it took to improve the market? It’s my belief that traders will eventually figure out that a rate increase in fact means that the economy is improving! So for now, here we go again, more fear of the unknown, what is the FED going to do, what are they thinking, what are they going to say, and when are they going to move???? Chicken Little, the sky is falling!!! I seriously question the temperament of the average trader these days.

My approach is simple, get out of the way until these folks figure out exactly what it is they are going to do. Until then it’s a crap shoot if you hold stocks through any FED meeting or announcement. So what are they going to do when the FED does raise interest rates? Quit trading and find a new occupation??? At any rate, we didn’t lose any money in TSP or AMP today. TSP was in the G Fund and AMP closed flat with no gain or loss…
The day’s action left us with the following signals: C-Sell, S-Sell, I-Sell, F-Buy. We are currently invested at 100/G. Our allocation is now -5.81% on the year not including today’s results.
10/03/14
Fund G Fund F Fund C Fund S Fund I Fund
Price 14.5392 16.5357 25.8302 34.0399 24.5586
$ Change 0.0009 -0.0007 0.2856 0.3064 -0.0977
% Change day +0.01% +0.00% +1.12% +0.91% -0.40%
% Change week +0.04% +0.41% -0.72% -1.30% -3.42%
% Change month +0.02% +0.30% -0.20% -0.09% -2.90%
% Change year +1.77% +5.04% +8.19% +1.10% -3.93%
  L INC L 2020 L 2030 L 2040 L 2050
Price 17.232 22.4241 24.1789 25.6207 14.5013
$ Change 0.0253 0.0731 0.1021 0.1263 0.0783
% Change day +0.15% +0.33% +0.42% +0.50% +0.54%
% Change week -0.24% -0.80% -1.03% -1.19% -1.39%
% Change month -0.14% -0.48% -0.61% -0.69% -0.82%
% Change year +2.47% +2.88% +3.07% +3.17% +3.11%
Lets take a look at the I fund today. It’s in the worst shape of any of our TSP Funds. Of course the chart is courtesy of Stockcharts.com.
The I Fund is a solid sell signal. All four of our major indicators are in negative territory. The thing to really watch on this chart is the 50 EMA. If it crosses over the 200 EMA this chart will officially be in bear territory. In other words it would be considered to be in a bear market. This chart is largely composed of foreign stocks and is mostly down because of the European markets. The big question is if this does go bear will it spill over to the US? That’s the reason that this chart bares scrutiny. That is to say, we should watch it not because we are interested in investing in it as that is clearly not the case, but because of its relationship to our other funds. Many times, I have seen this chart signal what will take place in the major US indices such as the S&P 500. Can you say C Fund?
1006
As you can see above, there are a lot of negatives out there right now and we need to keep our eye on every one of them. I still think there will be a good buying opportunity in the coming days or weeks. So keep your powder dry and stay ready. Timing on this one will be important. Speaking of important, don’t quit praying for our group. That has always been the true source of our success. May God continue to bless your trades! Have a nice evening.
God bless,
Scott8-)


Written By

Scott Grimes

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