Good Evening, This market is never dull. Today investors sold high flying tech stocks and bought beaten down financial and energy stocks. In simpler terms they sold growth and bought value. They also sold interest rate sensitive stocks such as Real Estate and Utilities. Make no doubt about it. That is a clear signal that bond yields are rising. Which brings me to the main subject of the evening. We are currently invested in bonds should we stay there? This is where the water gets murky. Most market players are expecting the Fed to decrease rates next month. It they do that it will put more downward pressure on bond yields which would make bond prices rise again. Bond yields and prices always move in opposite directions. Herein lies our dilemma. We had hoped to remain in bonds until trade agreement is reached with China. Our belief is that such a trade agreement would most assuredly spur a rally. However, the price of bonds is starting to move down as bond yields rise and there is no guarantee that they won’t continue to rise. After all they are at record lows. They have to form a bottom sooner or later don’t they? That leaves us with two choices, equities or the G Fund. Folks I don’t have a lot of faith in equities, I just don’t. If the wind blows wrong in the trade negotiations there will blood in the streets. So I will tell you right up front. If you want to be totally safe you better move to the G. That said lets look at the facts. We do have a fresh buy signal in the C Fund. For that matter we also have a buy signal in the I Fund but I’d probably avoid that fund as long as the dollar is getting stronger. Bond yields are turning up. Major rallies are usually accompanied by rising bond yields. The Volatility index better known as the VIX closed below 16 today. Readings lower than 16 normally accompany the market moving higher. Other indicators such as Transportation stocks vs Utilities and Consumer Discretionary stocks vs Consumer Staples are all moving up. Even the price of copper which many watch as an economic and market indicator is rising. I can go on and on. In the end I must come to the conclusion that the indicators are calling for the market to move higher. I still don’t trust it. Not a bit but it’s basically a choice between the C Fund or the G Fund. If your time frame is long then get in the C Fund and be ready to get out quick if doesn’t work out. Or if your time frame is short and you are retiring soon or already retired then  move to the G and watch the action. As for myself I will be moving to the C Fund effective as of the market close tomorrow. These decisions are never easy. One thing you must know. If you do move to the C Fund get ready for some volatility. It will surely be a rough ride……

The days action left us with the following results: Our TSP allocation gave up  -0.54%. For comparison, the Dow gained +0.28%, the Nasdaq slipped -0.04%, and the S&P 500 added +0.03%.

Wall Street mixed as investors flee growth for value

The days action left us with the following signals: C-Buy, S-Neutral, I-Buy, F-Neutral. We are currently invested at 100/F but will be moving to 100/C tomorrow. Our allocation is now +8.50% 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].