Good Evening,
Another day with more records and we’re squeezing this pig as long as it will squeal! The market keeps melting up and even though logic would tell us it should be over, the fundamentals still look strong.
NEW YORK (CNNMoney)
High-five week for stocks
The week’s action left us with the following signals: C-Buy, S-Buy, I-Buy, F-Neutral. We are currently invested at 25/C, 75/S. Our allocation is now -2.98% on the year not including the days results. Here are the latest posted results:
| 06/19/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.4442 | 16.3268 | 25.5685 | 35.4731 | 27.1168 |
| $ Change | 0.0009 | 0.0057 | 0.0361 | 0.0427 | 0.1752 |
| % Change day | +0.01% | +0.03% | +0.14% | +0.12% | +0.65% |
| % Change week | +0.04% | +0.02% | +1.22% | +1.59% | +1.30% |
| % Change month | +0.12% | -0.48% | +1.99% | +3.60% | +1.96% |
| % Change year | +1.10% | +3.72% | +7.09% | +5.35% | +6.07% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2178 | 22.6963 | 24.611 | 26.1832 | 14.8966 |
| $ Change | 0.0103 | 0.0352 | 0.0474 | 0.0567 | 0.0372 |
| % Change day | +0.06% | +0.16% | +0.19% | +0.22% | +0.25% |
| % Change week | +0.29% | +0.70% | +0.88% | +1.02% | +1.15% |
| % Change month | +0.50% | +1.19% | +1.52% | +1.77% | +2.00% |
| % Change year | +2.39% | +4.13% | +4.91% | +5.43% | +5.92% |
Here’s what the SPY did today. Charts courtesy of Stockcharts.com ; Analysis by Decisionpoint.
Price is hanging out at the top of the bearish ascending wedge. Volume on the SPX was well above average today, again, typical of options expiration. The PMO is rising after bottoming before a negative crossover. It is definitely in overbought territory, but there is a little bit of room available for it to rise before reaching extreme readings.
The weekly chart shows price has yet to penetrate the top of the rising trend channel. The weekly PMO had a positive crossover and while it is in overbought territory, it hasn’t reached extremes.
Conclusion:
Price action was limited while volume was very high, typical of options expiration. Shorter-term indicators continue to be bullish, but intermediate-term indicators are getting very overbought and will require a decline or at a minimum, consolidation to unwind. Add to that a bearish ascending wedge pattern and we should expect to see a price decline soon.
All in all, it’s not been a bad week. The charts all look strong and we are in equities taking advantage of it. The only concern is that the market is and has been extended. However, using that or the fact that traders are so complacent to call a top hasn’t worked in years. Ultimately, this house of cards will come crashing down, but trying to time that has been a losing proposition for a long while now. I even got caught up in it earlier this year myself and it cost me 5% or so on my returns. Based on what I had done before, I thought I was right. But, you know what? The market hasn’t cared what the bears have thought for years now. Trends always go on longer than we think are reasonable so the only real answer is and always has been to read the charts and respect the pricing action. That is what we are trying to do. Sometimes we are early to the party and sometimes late. This time we are late. Nevertheless, since we have been investing as a group we have only had one losing year which was -1.85% . With God’s help we will easily better that mark this year, as we have in all the others. Have a nice Weekend and may God continue to bless your trades. Scott
