Good Evening, Well indecision by investors led to another less than stellar day in the markets with the Dow and S&P 500 both finishing in the red for the day. There will definitely be more of the same ahead of next weeks oh so important Fed meeting. There are two scenarios that are possible. I think we have already had a preview of what we are going to get if the Fed goes ahead with a rate increase. If they do not then I expect we will have a relief rally. Although, (as I noted in earlier blogs) I still expect the latter half of September to have a negative bias. Our strategy was and is to get throught this negative seasonal period in bonds and ride an equity rally into December. I believe that the only thing that can throw a wrench in our plans is the election and how it is perceived by investors. If you can tell me who is going to win then I’ll make a stab at how the market might react, but right now that’s too close to call. The only things that we can trust in to be sure are the charts and God…..
The days trading left us with the following results: Our TSP allotment gained +0.13% on the day. For comparison, the Dow fell -0.18%, the Nasdaq added +0.36%, and the S&P 500 slipped -0.06%. One interesting observation is that the while the S&P 500 has experienced such a high level of volatility in recent days, over the last three days it actually only moved -0.09%. A lot of smoke and very little fire. There has still been no resolution to this tight trading range.
Fed jitters and oil pull Wall Street lower; Apple rallies
The days action left us with the following signals: C-Neutral, S-Neutral, I-Neutral, F-Neutral. We are currently invested at 100/F. Our allocation is now +0.97% not including the days results. Here are the latest posted results:
| 09/13/16 | Prior Prices | ||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 15.101 | 17.8345 | 29.1469 | 37.6642 | 24.3554 |
| $ Change | 0.0007 | -0.0526 | -0.4295 | -0.6867 | -0.3956 |
| % Change day | +0.00% | -0.29% | -1.45% | -1.79% | -1.60% |
| % Change week | +0.02% | -0.28% | +0.00% | -0.53% | -0.89% |
| % Change month | +0.06% | -0.82% | -1.95% | -2.05% | -0.45% |
| % Change year | +1.24% | +5.19% | +5.75% | +6.89% | +1.08% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 18.1802 | 23.9343 | 26.0144 | 27.665 | 15.6769 |
| $ Change | -0.0595 | -0.1686 | -0.2636 | -0.3267 | -0.2096 |
| % Change day | -0.33% | -0.70% | -1.00% | -1.17% | -1.32% |
| % Change week | -0.08% | -0.17% | -0.24% | -0.28% | -0.31% |
| % Change month | -0.31% | -0.68% | -0.99% | -1.16% | -1.30% |
| % Change year | +2.29% | +3.13% | +3.79% | +4.12% | +4.33% |
Now lets take a look at the charts. All signals are annotated with green circles. If you click on the charts they will become larger.
C Fund: Price has found support at the 100 EMA for the time being. If that breaks down look for it to drop to the 209 range.
S Fund: Price is trading below it’s 50 EMA. However, the MFI and SCTR (77.0) remain strong indicating that there may be some up side when this downturn is over. Also, take note of the volume during the first three days in September. That’s an awful lot of money moving into this fund!
I Fund: Price is hanging onto support at the lower trend line that’s about the only positive thing about this chart today. An SCTR of 28.4 is not very encouraging.
F Fund: Bonds are in the same boat as stocks in that price is trending down. Albeit to a lesser degree. That said, The Wms%R, the MFI, and the SCTR are predicting some up side. Couple that with the fact that the PMO and MACD being oversold and I’m comfortable riding this season out in bonds. The only thing that could really hurt us here is if we actually get a rate increase next week. I’m going to be honest. I hate to prognosticate. I really do, but I just don’t think the Fed has enough ammunition to raise rates at this time. Maybe in December but not now. Also, don’t forget. Stocks will probably sell off as well. The only totally safe place is the G Fund and if you are risk adverse you better move there now.
Right now it’s all about next weeks Fed decision. There is little doubt it will move the market and move the market big in one direction or the other. Have a nice evening and may God continue to bless your trades!
