Good Evening,
Janet Yellen testified before Congress today and the market loved it, but how far can it go? Will we return to the 2013 style of market and rise on air to set new records?
Stocks soar as investors cheer Yellen
The day’s rally left us with the following signals: C-Neutral, S-Sell, I-Neutral, and F-Buy. Our current allocation is 10/G, 90/F. We will adjust our allocation should we get buy signals in our equity based funds, but that is far from a done deal just yet. Our allocation is -2.57% in 2014. Here are the latest posted results:
| 02/10/14 | |||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 14.3265 | 16.0162 | 23.2955 | 32.9952 | 24.8552 |
| $ Change | 0.0027 | 0.0024 | 0.0369 | 0.0820 | -0.0403 |
| % Change day | +0.02% | +0.01% | +0.16% | +0.25% | -0.16% |
| % Change week | +0.02% | +0.01% | +0.16% | +0.25% | -0.16% |
| % Change month | +0.06% | +0.16% | +1.06% | -0.10% | +1.31% |
| % Change year | +0.28% | +1.74% | -2.43% | -2.01% | -2.77% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 16.7882 | 21.5704 | 23.1303 | 24.4236 | 13.7911 |
| $ Change | 0.0056 | 0.0107 | 0.0141 | 0.0173 | 0.0102 |
| % Change day | +0.03% | +0.05% | +0.06% | +0.07% | +0.07% |
| % Change week | +0.03% | +0.05% | +0.06% | +0.07% | +0.07% |
| % Change month | +0.26% | +0.55% | +0.65% | +0.71% | +0.79% |
| % Change year | -0.17% | -1.03% | -1.40% | -1.65% | -1.94% |
The C and the I Funds crossed into neutral territory today. We will be watching them closely to see if they can generate buy signals.
C-Fund
I-Fund
F-Fund
All charts courtesy of Stockcharts.com.
We will also be watching the F fund chart for deterioration. Bonds will normally take a hit when stocks go up and vice versa when they go down. Most of the negative chart formations that we have been watching are now in the past so all we really need to re-enter stocks are buy signals. We must be careful and not to jump to early. Stocks have now gone up solidly for four consecutive days now and are in need of a rest in the short term, so diving headfirst into the market pool might not be the best thing to do. I have dipped my toe in the pool on the street, but I am not constrained by the two trade per month rule there, so I can easily average into and out of stocks. That is not an option in TSP as you can easily find yourself out of trades and leaning the wrong way. It’s pretty much all or nothing so you really need to be careful. Are we leaning the wrong way now? Possibly, we will see in the next few trading days. As those of you who have been with me have been reading we were not expected yet another V-Shaped bounce similar to the ones that we have been experiencing since 2009. Our expectation was due to the onset of FED tapering (the reduction of their bond buying stimulus program). The V-Shaped bounces that have enabled stocks to recover quickly after mild corrections were not the norm prior to the FED manipulation of the market and I can guarantee you that the will not occur when it is gone. The million dollar question that everyone has been asking is when will the FED tapering allow things to return to normal. As far as this newsletter and my accounts on the street go, I have chosen to take the safe route and forgo any gains that buying and holding might net me. The risk reward factor is simply to great. When the market does return to normal, and drops without one of these spectacular V-Shaped (instant) recoveries, the buy and hold crowd will find themselves missing 10- 15% of there portfolio or worse with not way to get it back. The days of the market bailing the buy and holders out are coming to an end. It is not a matter of if but when! The day of the prudent and skilled money manager will return and the buy and hold crowd will all be wondering why what has worked so well for them the past three years is no longer working. If you are a consummate buy and holder then this is probably not your newsletter. We are not concerned with how much we make. We are concerned with how much we keep. We are not concerned with being top dog for a year. We are concerned with being top dog after ten years. With Gods help we have accomplished that and will continue to do so. Give him all the praise! Why do I talk so much about our philosophy? Because it’s not only important to know how to do something, but it is also important to know why. That’s all for tonight. May God bless you all and may he especially bless your trades! Have a nice evening.
Scott
