Good Evening, It started off to be  promising day but ended up being mixed, dull, and dreary. I know I keep saying this, but today really WAS a typical summer trading day. It seems that investors are worried about inflation being too low. The Fed’s target inflation rate is two percent. Right now we are below that.  As I mentioned in a few of my recent blogs, they worried about the bond market as bond yields continue to drop. To make it a little simpler, the bond market is signaling that that inflation isn’t going to rise and the Fed won’t be able to increase rates by the end of the year like they said they would. As we previously discussed this is putting a negative drag on the financial sector due to the fact that lower bond yields cut down on the profit margin that financial stocks can make. Also adding to the inflation worries was todays durable goods report which came in lower than economists estimated. You know it’s not like we have deflation and did any of these folks consider that oil helped inflation rise in the past? Well guess what, here’s a newsflash. We are now energy independent. The second oil rises above $45.00 a barrel oil companies start pumping more oil in the US. Thus, we have an oil glut and that oil glut is like a tax refund in the pocket of every American. We’ll save that one for later. In the past when the price of oil dropped it was because demand dropped. It was not because the supply increased. Well this time demand is healthy and supply is increasing so the price of oil is dropping. There has got to be a disconnect somewhere. The economy may be a little weak is it that bad??? The bottom line is that oil is not cheap because of demand. It’s simply not the economies fault. To add to the confusion, two Fed presidents spoke today and indicated that they are on target to increase rates. All this confusion and negative action continues to spill over into the market. So we have to ask ourselves, is the bond market right or is it wrong. If the price of bonds reverses and goes down the price of stocks will rise. If the price of bonds continues to rise it will put even more pressure on the market. So what do you think Scott? I do not believe the economy is all that bad, but I have been told by many savvy investors not to ignore the bonds.  My inclination is to sit back, watch the charts and see which way it’s going to go because I honestly have not idea. My vote is that the bonds are wrong but my vote doesn’t count. I really feel like the market will pick up when and if we see tax reform legislation moving forward in the legislature. Until then it’s all just speculation. Ahh yes, another summer trading day in the books!!!!!

Today’s trading left us with the following results: Our TSP allocation gave us a small gain of +0.17%. For comparison, the Dow rose +0.07%, the Nasdaq dropped -0.29%, and the S&P 500 eked up +0.17%. I guess our small gain could be considered out performance today. I thank God for that!

S&P 500, Dow edge up; tech weighs on Nasdaq

The days action left us with the following signals: C-Neutral, S-Neutral, I-Neutral, F-Neutral. We are currently invested at 100/I. Our allocation is now +9.34% on the year not including the days results. Here are the latest posted results:

I’m praying for bonds to go down! That’s all for tonight. Have a nice evening and may God continue to bless your trades.

God bless, Scott