Good Evening,
It seems that even the most die-hard traders are starting to concede that the market has changed to this current trading format forever. In that, I mean endless moving upward with occasional mild pullbacks and corrections. A market in which fund managers are constantly under performing and desperately looking to put money to work, in part because of a lack of entry points with no real (10% or more) pullbacks. OK, maybe I’m becoming a dinosaur, but I’m still not convinced. No Sir, not with my money or especially with the money of others. On the street my goal is simple: Capital preservation is #1 and making money is #2. So excuse me if I am slow to embrace this perma bull concept that has been disastrous in the past. Here’s what James DePorre had to say about it today:
06/10/14 8:12 AM: Morning Thoughts
“A number of things have changed in the market since the end of the vicious correction in 2008-2009 but from a trading standpoint probably the most significant is the manner in which stocks move. No longer do we have the normal ebb and flow that results from the battle between fear and greed. Instead we have streaky, one-sided action that reflects chronic underperformance by fund managers and a flood of cheap capital looking for a place to go.Over the past couple weeks the market has been engaged in yet another one of these V-shaped, straight up moves. The S&P 500 is up 11 of the last 13 days and market players seem committed to the idea that the uptrend will be endless.Typically this sort of complacency is a bearish sign but that hasn’t been the case for a number of years. The difference now is that even when there is little fear and a high level of bullishness there is still lots of idle capital to put to work. The bulls always will argue that there is capital on the sidelines to support the market but the shift now is that there is strong desire to put more of that cash to work but the market makes it too difficult because we never seem to have normal pullbacks.We are at the juncture now where the indices are obviously extended and in need of a rest but the big run over the last few weeks have left many fund managers desperate for performance. They are underperforming badly, as are many individual traders and investors, and the only way they can catch up is to buy strong stocks on temporary weakness.It is often said these days that the market is unloved even though it is making all-time highs. Very few folks seem to be happy with their performance even when they are making money. The problem is that the indices always make us feel like we are lagging. Outperforming through individual stock picking is simply much more difficult.So how do we deal with this sort of market action? We are obviously extended and in need of a rest but we have a strong uptrend and there is no reason to believe that the market is going to suddenly collapse. The key thing is to forget the market timing. The best approach for the last five years has been to stick with the trend until there is some actual change in price action. We do have some corrections and pullbacks but trying to guess when they will start and gain some traction is impossible. The best thing you can do is stick with long trades until they stop working.The worst possible thing you can do in this market environment is conclude that we are overbought and about to form a major top. Coming up with a long list of bearish arguments is futile even though it may sound intelligent.This market definitely looks tired and there was some stalling action in the S&P500 yesterday but when we have these sort of runs market players don’t let us rest for long. I’ll continue to look for new buys.”
Dow crawls to new record: 16,945.9
The day’s action left us with the following signals: C-Buy, S-Buy, I-Buy, F-Neutral. We are currently invested at 08/G, 92/F. Our allocation is now -3.24% on the year. Here are the latest posted results:
| 06/10/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.4362 | 16.2974 | 25.4399 | 35.1455 | 26.8318 |
| $ Change | 0.0009 | -0.0167 | -0.0059 | -0.0734 | -0.0203 |
| % Change day | +0.01% | -0.10% | -0.02% | -0.21% | -0.08% |
| % Change week | +0.02% | -0.16% | +0.08% | +0.25% | -0.02% |
| % Change month | +0.06% | -0.66% | +1.48% | +2.65% | +0.89% |
| % Change year | +1.04% | +3.53% | +6.55% | +4.38% | +4.96% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.1843 | 22.6014 | 24.4829 | 26.028 | 14.7975 |
| $ Change | -0.0025 | -0.0086 | -0.0128 | -0.0164 | -0.0103 |
| % Change day | -0.01% | -0.04% | -0.05% | -0.06% | -0.07% |
| % Change week | +0.02% | +0.04% | +0.05% | +0.06% | +0.07% |
| % Change month | +0.31% | +0.77% | +0.99% | +1.17% | +1.32% |
| % Change year | +2.19% | +3.70% | +4.36% | +4.81% | +5.22% |
Today was just another one of those days when nothing really worked. The C Fund did close the gap at the end of the day but still managed a loss by the slimmest of margins.
C Fund : The chart for the C Fund is still clean and green with positive crossovers with great separation in both the EMA’s and the PMO. My only concern with this chart is that the PMO has now risen to its overhead resistance at 1.0. That leaves us to wonder just how much steam this rally has left. For now though, the trend is your friend!
Yes, I am still invested in the relative safety of bonds and will remain there until the equity charts roll over or I get a sell signal in bonds. I am considering a move into precious metals on the street, but we don’t have that option available in TSP. I still do not feel comfortable in embracing this rally. We will see what happens. I could be wrong, which I have been so far, or this could end up being the ultimate bull trap. As I said, we will see. One thing I do know for sure– God is still watching over us every day! Have a great evening.
God bless,
Scott
