11/10/14

Good Evening,

The major indices all rose today. The most notable thing was that there wasn’t a lot a volatility. It appears that traders have settled into a groove for the holidays. That said, it’s likely to be a slow slog up as an extended market deals with positive seasonality and continued low interest rates. The support in equities isn’t necessarily coming from the usual places for the usual reasons. US stocks continue to be attractive to foreign investors as a way to take advantage of the rising dollar. Speaking of the rising dollar, it has wrecked alternative investments such as precious metals and oil. And bonds? While I’m not hearing the talking heads say too much about it, most of the traders that I know are nervous about interest rates rising which will definitely wreck the bond market when that day finally comes, and it will come.  Which brings me to my point, the one that I have made several times already this year. Stocks are really the only game in town so they keep defying logic and going up. The thing you have to remember about the market is that it doesn’t always do what is logical. It will often hang on to a trend a lot longer than we think it should. That is why we must shut out all the noise and distractions and focus on the pricing action. Our charts will tell us when to get out. As for as today’s results, both TSP and AMP added to their recent gains moving forward to the tune of +0.32%. 

 

Wall Street Climbs to Fresh Highs 

 

 

 

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 -1.46% on the year not including today’s gains. Here are the latest posted results:
11/07/14
Fund G Fund F Fund C Fund S Fund I Fund
Price 14.572 16.6578 26.7224 35.5558 24.6711
$ Change 0.0008 0.0427 0.0142 0.0356 -0.0661
% Change day +0.01% +0.26% +0.05% +0.10% -0.27%
% Change week +0.04% +0.08% +0.78% +0.25% -1.84%
% Change month +0.04% +0.08% +0.78% +0.25% -1.84%
% Change year +1.99% +5.82% +11.93% +5.60% -3.49%
  L INC L 2020 L 2030 L 2040 L 2050
Price 17.3693 22.7718 24.6498 26.1947 14.8564
$ Change 0.0027 -0.0004 -0.0011 -0.0013 -0.0024
% Change day +0.02% +0.00% +0.00% +0.00% -0.02%
% Change week +0.04% -0.03% -0.04% -0.05% -0.09%
% Change month +0.04% -0.03% -0.04% -0.05% -0.09%
% Change year +3.29% +4.48% +5.08% +5.48% +5.64%

Lets take a look at the C Fund. (Chart courtesy of Stockcharts.com)

The C Fund has broken through resistance and continues to climb within the established ascending channel. The ascending channel is very steep due to the V-Shaped bounce. It is probably too steep and will likely not be able to maintain its current rate of ascent. Look for the lower ascending channel line to be challenged again in the near future with a new, more sustainable trading range being established. The Upper Resistance Line has now become support and will probably be tested as price becomes over extended. We will use the PMO to judge this range and will consider reducing our exposure to equities when its upper resistance line is penetrated. It is extremely likely that will be the time when price support will be tested. Should that support be broken to the downside, we can expect lower prices in the short to intermediate term. As usual, I have annotated several points of interest on the chart. Remember, the C Fund (S&P 500) is an excellent index from which to gauge the overall health and direction of the market.
1110
Conclusion: Expect higher prices in the short term, but expect the rate of ascension to slow as price becomes more extended, ultimately resulting in a test of support in the 2020 range. Should that support fail to hold expect falling prices.
Nothing new to add here. The market is falling in line with our analysis; albeit, it is ahead of schedule. Our current task is to closely monitor the resulting extended conditions to ensure that we don’t get caught in a sell off, should one occur. In other words, we can leave it on cruise for now, but we definitely shouldn’t take our eyes off the road. We should also keep praying and make sure that God remains in that co-pilot seat! May He continue to bless your trades! Have a nice evening.
 God bless,
Scott8-)

 

 



Written By

Scott Grimes

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