10/17/14

Good Evening, Are we recovering? It looks possible that another V Shaped bounce could be coming late to the party which is not impossible as a lot of cheap FED money is still floating around. However, the market does have considerable headwinds this time around given the poor economic situation in Europe. At this point, we must watch the action with skepticism and listen only to our charts and not our hearts. While the action thus far is encouraging and falls within our expectations, we must be careful not to fall into a bull trap. Remember, it was a statement by a FED member that got this started and another small news item could easily reverse it, trapping many aggressive bulls when it does. Proceed with caution! A retest of lows is a strong possibility and loading up on long positions at this point would be premature.

Small caps continued to pop in the morning session, but dropped off in the afternoon. However the Russell 2000 that we featured yesterday was up well over 2% on the week. I think small caps will ultimately lead us off the bottom of this dip. They are making progress and may allow us to invest sometime next week it they continue to do so. Yesterday we observed that small caps may be bottoming. RevShark had a few comments about the subject: “A positive development the last few days has been that small caps stocks continue to outperform. Small caps were the canary in the coalmine at the top and now they are signaling that they are improving. It is unusual for small caps to lead off the lows but they have corrected far deeper than the rest of the market and are starting to attract some bargain hunting.” (His website for the serious investor is SharkInvesting.com)

 

Here’s the latest headlines:

Wall St. gains one percent on results but S&P down for fourth week

 

 

The day’s action left us with the following signals: C-Sell, S-Sell, I-Sell, F-Buy. We are currently invested at 100/G. Our allocation is now -5.73% on the year not including today’s results.

10/16/14
Fund G Fund F Fund C Fund S Fund I Fund
Price 14.5515 16.7364 24.4666 32.8207 23.4959
$ Change 0.0009 -0.0560 0.0048 0.3777 -0.1633
% Change day +0.01% -0.33% +0.02% +1.16% -0.69%
% Change week +0.04% +0.52% -2.26% +1.24% -1.41%
% Change month +0.10% +1.52% -5.47% -3.66% -7.10%
% Change year +1.85% +6.32% +2.48% -2.52% -8.09%
  L INC L 2020 L 2030 L 2040 L 2050
Price 17.0886 21.9024 23.4535 24.7373 13.932
$ Change -0.0020 -0.0036 0.0007 0.0084 0.0050
% Change day -0.01% -0.02% +0.00% +0.03% +0.04%
% Change week -0.24% -0.69% -0.85% -0.93% -1.06%
% Change month -0.97% -2.80% -3.60% -4.11% -4.72%
% Change year +1.62% +0.49% -0.02% -0.39% -0.93%
Things are improving but they’re not there yet. Lets keep an eye on our S Fund chart as it seems to be the key to things right now.  The S Fund continues its improvement. It still needs a lot of work, but its progress the past few days has been promising.

1017

I’d like to clarify a few things about signals. They are a suggestion of what should be done. They are not mechanical! There are times that it may or may not be in your best interest to follow them. Think of them as a measure of risk and reward. A buy signal would give you the highest chance of reward with the lowest chance of risk. There is not (and never will be) a no-risk situation! After all, this is the market!!! A Sell signal, as you might imagine, is the opposite of a buy. It signals the highest level of risk and the smallest chance of reward. Again, it does not mean no reward! After all, there’s always a bottom. A Neutral sign means that there is an equal chance of reward and risk. However, it is always good to consider whether the chart entered the neutral zone from above or below. In other words, was it heading up or down. That might give you some bias in your decision on such a chart. As a rule, I don’t buy neutral charts, but neither do I sell them. I think of a neutral signal as a wake up call to pay attention to the chart, as something may change!
Our strategy at this time remains the same. We are monitoring the charts (especially small caps) to see if they continue up or if lower resistance is tested again. Should we get a buy signal in the next week or so we plan on re-entering equities. Right now that’s still a big IF, so hold the phone! That’s all for tonight so have a great weekend! May God continue to bless your trades.
Scott8-)

 



Written By

Scott Grimes

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