Good Evening,
ECB president Mario Draghi said this morning that he favors additional stimulus for the European economy. That was all that was needed to spur the market on. Of course, the talking heads lauded the action. However, I found it to be somewhat tepid. Nevertheless, the market showed some undeniable underlying strength as it continued up, extended or not. The thing that continues to amaze me about the market the past several years is the way that it continues up without regard for the fact that it hasn’t really had a rest. It just keeps going up, fed by the computer algorithms and under-invested bulls. Traders don’t really like doing it, but they chase anyway. It’s the only way to avoid under-performing. All three of the major indices managed small to moderate gains today. As a result, both TSP and AMP also posted gains in the same range.
Dow, S&P 500 hit records in volatile trading
The day’s action left us with the following signals: C-Buy, S-Buy, I-Neutral, F-Sell. We are currently invested at 30/C, 70/S. Our allocation is now -2.10% on the year not including today’s gains. Here are the latest posted results:
| 11/05/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.5703 | 16.6331 | 26.5994 | 35.2929 | 24.8304 |
| $ Change | 0.0008 | -0.0032 | 0.1601 | 0.0372 | 0.0830 |
| % Change day | +0.01% | -0.02% | +0.61% | +0.11% | +0.34% |
| % Change week | +0.03% | -0.07% | +0.31% | -0.49% | -1.21% |
| % Change month | +0.03% | -0.07% | +0.31% | -0.49% | -1.21% |
| % Change year | +1.98% | +5.66% | +11.41% | +4.82% | -2.87% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 17.3583 | 22.7481 | 24.6155 | 26.15 | 14.8304 |
| $ Change | 0.0166 | 0.0517 | 0.0700 | 0.0836 | 0.0532 |
| % Change day | +0.10% | +0.23% | +0.29% | +0.32% | +0.36% |
| % Change week | -0.02% | -0.13% | -0.18% | -0.22% | -0.26% |
| % Change month | -0.02% | -0.13% | -0.18% | -0.22% | -0.26% |
| % Change year | +3.22% | +4.37% | +4.93% | +5.30% | +5.45% |
Let’s let the Decision Point Crew take the wheel for our look at the charts this evening. Here’s what the SPY did today. (Chart Courtesy of Stockcharts.com)
“Good news is that price traded above horizontal support at the September high. The bad news is that overhead resistance is very close by. The PMO looks bullish, but it is nearing overbought territory and would likely reach it at about the same time as price would likely meet resistance if it continues higher.”
“Conclusion: Indicators in all time frames are beginning to look bearish due to readings being overbought. Price is nearing overhead resistance at the same time the PMO is getting overbought. It’s probably time for a pullback or at the very least some consolidation.”
Of course if I posted the analysis that means I agree with it, unless I note otherwise. In this case I agree with it very much. As I pointed out in the past few newsletters, things are indeed getting extended. Our job is to watch the charts for signs of weakness and reduce our exposure to stocks when it comes. That doesn’t mean we run for the exits. That means we make an orderly exit with only a portion of our funds preserving part of our gains while retaining enough exposure to take advantage of any additional runs that the market may give us. As I have often said, it is better to average into or out of a position when the opportunity presents itself. It will cover up a multitude of mistakes! That’s all for tonight. Have a great evening and may God continue to bless your trades!
God bless,
Scott
