Good Evening,
You know the news is sometimes helpful and sometimes misleading. It is nice to have in that it can help you know what to look for on the charts. However, to be perfectly honest with you, as a technical analyst I can do about as much good without the news as I can with it. By the matter of fact, there are times when I can do better. Nevertheless, I scan the news everyday for clues as to where to concentrate on my charts and to be quite honest, to write this newsletter. Today the market had a negative bias, although it did close well off its lows. In looking over my charts, it is clear that the market needed some consolidation to relieve internal pressure from last weeks run and today, that’s what we got. The dip buyers showed up in the afternoon to take us off the day’s lows, which shows just how much strength this market really has. All in all, the day’s trading is what we should have expected considering last week’s strong run. As of the close, the Dow actually managed a 0.07% gain and the Nasdaq ended up 0.05%. TSP and AMP both suffered small losses but held on to the majority of last week’s gains. For the rest of the week we more earnings reports and the results from the FED meetings as possible market movers, but as always, it comes down to the charts…..Here’s the news.
Wall St. flat after last week’s big gain; energy weighs
The day’s action left us with the following signals: C-Buy, S-Buy, I-Neutral, F-Buy. We are currently invested at 30/C, 70/S. Our allocation is now -4.90% on the year not including today’s results. Here are the latest posted results:
| 10/24/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.5591 | 16.6787 | 25.8092 | 34.3007 | 24.3758 |
| $ Change | 0.0009 | 0.0018 | 0.1811 | 0.1546 | 0.0288 |
| % Change day | +0.01% | +0.01% | +0.71% | +0.45% | +0.12% |
| % Change week | +0.05% | -0.24% | +4.14% | +4.02% | +2.39% |
| % Change month | +0.16% | +1.17% | -0.28% | +0.68% | -3.63% |
| % Change year | +1.90% | +5.95% | +8.10% | +1.87% | -4.65% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.2573 | 22.4377 | 24.1883 | 25.6288 | 14.4988 |
| $ Change | 0.0191 | 0.0571 | 0.0783 | 0.0950 | 0.0597 |
| % Change day | +0.11% | +0.26% | +0.32% | +0.37% | +0.41% |
| % Change week | +0.75% | +1.84% | +2.37% | +2.73% | +3.08% |
| % Change month | +0.01% | -0.42% | -0.58% | -0.66% | -0.84% |
| % Change year | +2.62% | +2.95% | +3.11% | +3.20% | +3.10% |
The C and the S Fund are neck in neck. The C Fund has the edge on the way down and the S Fund performs a little better going up. Here’s that the C fund looked like today. (All charts courtesy of stockcharts.com)
The C Fund is a solid buy signal. Price is consolidating above the 20 EMA. That coupled with the fact that the PMO is rising out of overbought territory is very bullish. I have annotated most of the particulars on the chart. One thing I didn’t have room for was the new upward ascending channel that has formed. Also bullish…
Let’s also take a look at the SPY which is an ETF (Exchange Traded Fund) that tracks the S&P 500. Carl Swenlin prefers to use it as he feels that it gives a little better read on what’s going on since it is traded like a stock. I try to watch both. This is the chart from Decision Point with analysis by Erin Heim. For those of you not familiar with her, she’s Carl’s Daughter. You can now follow them on Stockcharts.com as Decision Point merged with Stockcharts.com. It’s a great website for the serious technical analyst.
“Price is consolidating and clustering just above the 50-EMA. I like that the 50-EMA is holding as support because it is bringing the 20-EMA up toward a positive crossover the 50-EMA which would take us off of our Neutral signal. While the Trend Model Neutral signal prevented a loss on the deep part of the correction, it isn’t able to react very quickly when price turns around. Volume is continuing to fade.”
“Conclusion: Internal pressure was building in our short-term indicators and we needed to see them start to decompress. As I noted on Friday, this can often be accomplished through a consolidation without the need of a decline. That appears to be what is occurring. Intermediate-term indicators are still very bullish but short-term indicators could use more consolidation or some decline to get them out of overbought extremes.”
I agree with Erin’s analysis. We are undergoing some consolidation that is resetting our indicators for another run up. If you have been reading this commentary all along, then you already know that our charts and seasonal indicators have been pointing toward a November/early December rally. We are well positioned for that and need only to watch our charts for things to unfold and for a good exit point when they get extended. That’s all for tonight. Have a nice evening!
God bless,
Scott
