Good Evening,
The S&P, Dow, and Nasdaq posted minor losses on the day, but guess what? The IWM (Russell 2000) was up. What gives? Is this the beginning of a new trend? I doubt it. For one thing, the day’s gains were not enough to keep the IWM from producing a sell signal using short term indicators. The IWM and the telecom sector (Twitter in particular) were the bright spots of the day. The F Fund posted the lone gain in thrift at +0.10%. Bonds continue to make small but steady gains. Speaking of bonds, the AMP program was up again today, out-performing the DOW, S&P, and Nasdaq. The portfolio earned +0.16% on the day. That doesn’t sound like all that much but it was a solid +0.58% ahead of the DOW! I’ll take that gain every day if I can get it. Remember, Its not how much you make. It’s how much you keep!!! Another thing worth noting from today’s market: Precious metals continued to suffer, showing that not all traders are moving to safe havens. Precious metals (gold in particular) usually rise along with bonds when stocks start to suffer. This market continues to send mixed signals…..
NEW YORK (CNNMoney)
The summer doldrums appear to be officially here. Stocks didn’t do much Tuesday — a day after the market was mostly spinning its wheels.
The day’s action left us with the following signals: C-Neutral, S-Neutral, I-Neutral, F-Buy. We are currently invested at 50/C, 50/S, but will consider a move to bonds should we get a sell signal in either of the two. Our allocation is now -3.94% on the year not including today’s results. Here are the latest posted results:
| 07/28/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.479 | 16.4351 | 25.861 | 34.8699 | 26.7017 |
| $ Change | 0.0027 | -0.0124 | 0.0076 | -0.1039 | -0.0024 |
| % Change day | +0.02% | -0.08% | +0.03% | -0.30% | -0.01% |
| % Change week | +0.02% | -0.08% | +0.03% | -0.30% | -0.01% |
| % Change month | +0.17% | +0.04% | +1.06% | -2.49% | -0.58% |
| % Change year | +1.34% | +4.41% | +8.32% | +3.56% | +4.45% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2572 | 22.7143 | 24.6098 | 26.1612 | 14.8718 |
| $ Change | 0.0006 | -0.0031 | -0.0066 | -0.0102 | -0.0066 |
| % Change day | +0.00% | -0.01% | -0.03% | -0.04% | -0.04% |
| % Change week | +0.00% | -0.01% | -0.03% | -0.04% | -0.04% |
| % Change month | +0.15% | +0.08% | +0.00% | -0.08% | -0.13% |
| % Change year | +2.62% | +4.21% | +4.91% | +5.34% | +5.75% |
Things are starting to get hairy in the chart world…. (all charts courtesy of stockcharts.com)
Trading was all over the place today. The talking heads are blaming concerns over Russia’s involvement with rebels in Ukraine as the catalyst to uncertain trading. I’ve annotated a head-and-shoulders pattern. It isn’t perfect, but I feel it is close enough. It is a reversal pattern and is occurring in the middle of a short-term bearish rising wedge on the daily chart. Expectation in the ultra-short-term after the breakdown would be a drop that is equal to the height of the pattern. That would put price around 196 on the SPY.
196 on the SPY would constitute a breakdown out of the rising wedge. Should there be a breakdown, the “minimum downside target” of 196 will be just a start. I would expect to see a break toward the first rising trend line support drawn from February low. Volume was very high on this move lower, which is bearish.
Conclusion: Though support held at the bottom of the short-term ascending wedge, the 10-minute bar chart has a bearish head and shoulders and indicators are all bearish. It could be time for the ascending wedge pattern to execute as price finally breaks down out of the rising trend.
Things are looking a little bearish. We noted yesterday that the Ukrainian situation was a possible land mine. It appears that it indeed led the market lower today. That said, I am switching from long term to intermediate term indicators to determine signals. I am still a little gun shy from the short term indicators. They just don’t seem to work well with the FED manipulating the market. I just hate to give up any ground at all before I sell and go to bonds in TSP, as we are already running a small deficit for the year. It is tempting to try to call the top as so many people have attempted to do this year, but we must not let emotion crawl into the decision. Emotion will cause you to lose nine times out of ten. The truth of the matter is that we have been whipsawed 3 times in 2014 and that is extremely rare. I can count the times that I was whipsawed in the last twenty years on one hand and have a few fingers left. We shouldn’t allow the FED manipulation of the market to cause us to abandon disciplined money management. We shouldn’t allow our under performance in 2014 to influence our decision either. After all, we did gain +36.3% in 2013, so we shouldn’t give up on the principles of money management that got it for us. Oh yeah, for those of you looking at our 2013 total on the auto tracker that reads 21.3% gain and saying our allocation didn’t make 36.3% don’t forget that the 21.3% total was from 03/11/14 through the end of the year. We didn’t start the auto tracker until 03/11/13 and had already gained 15% prior to that time. Those of you that followed our allocation for the entire year already know this, but those of you that joined us later do not, so I just wanted you to know that we were not trying to deceive you when we claimed a return of 36.3% for 2013. The fact of the matter is that we made the decision to use the auto tracker in March of 2013 as an easy way for people to verify our returns etc, etc….. All that said, we are sticking to our guns. It’s possible that we may post a small loss on the year, but if we do it will be because the market went south and posted a bigger loss. The year isn’t over just yet though. We serve an awesome God and He will guide us if we are faithful. May he continue to bless your trades.
Have a great evening!
Scott
