Good Evening,

Today brought another failed bounce. The bulls definitely aren’t accustomed to this! With God’s help, our analysis was both clear and accurate. No longer is there so much FED money to cloud the picture. The Dow dropped another -0.46%, although it did close off its lows for the day. The S&P slid back -0.56% and the Nasdaq matched the Dow losing -0.46%. Of course the media machine had an excuse for the poor action, which this time was the situations in the Ukraine and Iraq. The thing you must understand is this: Sometimes the news makes the market, but more often than not the market makes the news. This market was ready for a pullback. It was obvious in the majority of the equity based charts. All that was needed was an excuse for the selling to start and once the selling started, the media had to write a story to explain the drop. The bottom line is the markets correct and if you play them right you can make a lot of money.

Our strategy always has been and always will be to to preserve our capital on the way down and add to it on the way up. Our motto is “It’s not what you make, but what you keep” and our method for making it happen is technical analysis. Our system is not about news or emotion, it is based on the concrete facts that are given to us by our charts. Today is a classic example of how our system works. While we didn’t make a killing in one day, we did add to our gains of the last two days and preserved our capital to make bigger gains when our charts tell us that the market is heading back up. Speaking of results, our TSP allocation added another +0.15%  and the AMP program gained a solid +0.347%. AMP is up +0.95% since the first day of the month. The Dow is now down more than -1.00% in the same period. That is a difference of over 2%! It’s been so long since we’ve had anything but sideways movement in the market and that has made it very hard for traders and fund managers to make any meaningful gains. Only the day traders were able to make any money by quickly flipping stocks. All that said, the more the market moves, the more money we can make. Give God the praise for allowing us to be in the right place!

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NEW YORK (CNNMoney)

Investors pushed pause. Then they hit rewind.

 

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The day’s action left us with the following signals: C-Sell, S-Sell, I-Sell, F-Buy. We remain invested at 25/G, 75/F and thank God for being positioned well for this correction. Our allocation is now -6.20% on the year not including today’s results. Here are the latest posted results:

08/06/14
Fund	G Fund	F Fund	C Fund	S Fund	I Fund
Price	14.4873	16.4454	25.1119	34.2087	25.7826
$ Change	0.0009	-0.0010	0.0082	0.0243	-0.1786
% Change day	+0.01%	-0.01%	+0.03%	+0.07%	-0.69%
% Change week	+0.03%	+0.09%	-0.21%	+0.28%	-1.36%
% Change month	+0.04%	+0.29%	-0.50%	+0.04%	-2.09%
% Change year	+1.40%	+4.47%	+5.18%	+1.60%	+0.85%
	L INC	L 2020	L 2030	L 2040	L 2050
Price	17.1651	22.3806	24.1477	25.5997	14.5085
$ Change	-0.0041	-0.0198	-0.0267	-0.0314	-0.0215
% Change day	-0.02%	-0.09%	-0.11%	-0.12%	-0.15%
% Change week	-0.06%	-0.23%	-0.29%	-0.32%	-0.38%
% Change month	-0.12%	-0.43%	-0.54%	-0.61%	-0.72%
% Change year	+2.07%	+2.68%	+2.94%	+3.08%	+3.17%

The I fund is really getting pounded. The European economy is starting to suffer as a result of the sanctions on and from Russia. There are no real winners in a trade war. I don’t have to tell you that if the European Economy continues to suffer that we will be effected. I just can’t find a lot of reasons to be bullish right now.

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Here’s what the SPY looked like today. All charts courtesy of Stockcharts.com. Analysis is by Decision Point

“SPY has nearly reached the intermediate-term rising trend line as it continues to drift lower. If selling begins again in earnest, the support will be violated and the market will be in a much more vulnerable condition. The sliding cluster formed over the last five trading days looks to us to be the middle part of a correction, at the very least. A good example is the January/February correction. Just one more short leg down could complete the correction, but the technical damage could have longer-term effects.”

“Conclusion:  We think the correction has a bit more to go, but once it has gone down one more leg, indicators in all three time frames will be sufficiently oversold that another good rally could develop; however, another down leg will cause some serious technical damage, so increased caution would be advisable. In bull markets we are trained that oversold conditions are excellent entry points for the next rally, but, when the market takes on a bearish bias, oversold conditions are like “thin ice” warnings, and can be a prelude to more selling.”

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That’s a good point. The rules are different in a bear market. Not that we have a bear market now, but the point they are trying to make without actually saying it is that any time you have a correction, you have to treat it like a bear market because it could well be the beginning of one. The two main rules in a bear market are #1 You sell into strength, and #2 you assume that oversold conditions will lead to more selling. A simple way to put it is that you don’t try to call the bottom. As we said here a day or so ago, there is always plenty of time to jump back into the market on the way up. Some analysts refer to buying stocks on the way down as trying to catch a falling knife. You always wait until a knife hits the floor before you try to pick it up. In our case, that translates into waiting for a buy signal. That’s enough for tonight. We could use a few more days of correction to shake out the perma bulls and create a better re entry point. May God continue to guide our hand. Give Him thanks! Have a nice evening.

God bless,

Scott