Good Evening, What a wild ride it’s been lately. Friday we had a possible agreement with China on trade leading to a rally on Monday. Then today once the market got over that euphoria it sold off furiously after it realized that there really wasn’t a deal. I mentioned in several recent blogs that many of the market indicators that I follow indicated that it is not safe to be in the market at this time. That flew in stark contrast to what the media and the fundamentals were saying. Well today was what I have been talking about! Volatility. Sure, the market had a good week last week and a great day yesterday. The action had the feel that we were off to the races for a Santa rally into the new year. But that was not to be the case! All of yesterdays and last weeks gains were wiped out in a single session. I never said that you couldn’t make some money at this time. I even mentioned that it is a day traders paradise. What I did say was that it would be hard to hold onto what you made. I even restated our motto “It’s not what you make that’s important, it’s what you keep!”. Folks, the market may come screaming back on Thursday (remember there will be no trading tomorrow in honor of President George H W Bush) but it sure felt good to be sitting out today!

So what’s really up with this market? There are several issues that are bringing it down. #1 The market figured out today that what we really have with China is 90 days of uncertainty. I’ve said here a thousand times if I said it once but I’ll repeat it again for the sake of this discussion. The market hates uncertainty. Anytime there is uncertainty it will not trade well. You can take that to the bank. #2 We are close to having an inverted yield curve in bonds. That is a whole lot simpler than it sounds. Short term bond yields are higher than long term bond yields. They usually compare the two year to the ten year treasury bonds when they talk about this. An inverted yield curve simply means that the 2 year bond yield is over the 10 year bond yield. The significance of this is that an inverted yield curve always proceeds a recession. It usually occurs six to eight months before a recession so investors become very skittish when happens. Here is the thing you most understand about inverted yield curves. A recession is always accompanied by an inverted yield curve but an inverted yield cure is not always accompanied by a recession. Think about what I just said. It simply means that a inverted yield curve is a warning of a recession. It is not a guarantee of one. Nevertheless, it freaks the market out anytime one appears…. #3 The Transportation Sector is behaving miserably. You can’t have a bull market without the transportation sector. #4 The VIX (Volatility Index) remains above 16. I’m not going to rehash that either but understand that you will have more days like today when it is higher than 16. Shall I go on?? I think you get the picture. I will add that I have a proprietary indicator that I have developed that I put a lot of faith in. It also says this is not a healthy market. The bottom line is that as long as it remains like this I will watch from the sidelines. I simply don’t care how many days like yesterday that we have. I care about days like today!!!!!

The days trading left us with the following results: Our TSP allotment was steady in the G Fund. You might want to cover in young children’s eyes that are in the room before you read this next section LOL. For comparison, the Dow lost  -3.10%, the Nasdaq -3.80%, and the S&P 500 3.24%. The place to be today was the F Fund which had a return of +0.27%. Not so much for our other funds….the S dropped 3.75% and the I fell -2.56%. It was ugly out there. I thank God that our money was safe.

Wall Street tumbles, spooked by growth and trade worries

The days action left us with the following signals: C-Neutral, S-Neutral, I-Neutral, F-Buy. We are currently invested at 100/G. Our allocation is now -4.05% on the year not including the days results. Here are the latest posted results:

God bless, Scott 

 

 ***Just a reminder that you can review the performance of our allocation at the Web Site TSPTALK.com in the autotracker section under the screen name KyFan1.

 

 

I produce and publish this blog as both a ministry and for the benefit of any Federal Government Employee. This is done to offer you some guidance as to how to approach your retirement more financially successful. When it is time for you to retire, I recommend you utilize the services of a Professional Money Manager, who works with a reputable investment firm. He understands the guidance you have already received and he can manage your savings assets utilizing a more advanced investment program into the future. 

 

If you would like to receive more information about this introduction, please feel free to contact me at  [email protected].