Stocks or bonds?
There is more than one way to approach this market and what you do depends on your market strategy. The market is looking bad, that's a given. Investors who dollar cost average into their TSP accounts are now buying more shares at a lower price than they were a couple of months ago. The key for them is to continue to invest and not let the market swings affect their plan.
I on the other hand like to take advantage of market swings. The main reason I do this is to try to avoid losses whenever the market is either overbought or in a down trend. Anyone can make money in a roaring bull market. Not losing money when it is down is the key to beating the market averages, which is my, and most market timers' goal.
The reason I bring this up is because we are in a time when traders are thinking one thing and investors another. I can see a rally coming here soon and that could benefit both short and long term traders. But I believe that a rally here will be short lived and the traders and investors will then go their separate ways. It's what makes a market. Someone always has to buy when someone else is selling.
After another positive open turned into negative close, the S&P 500 is at some support levels; Both the longer term rising trend line, and it happens to be at the low made the day of the London terrorist attack back in early July.
Chart provided courtesy of www.decisionpoint.com
A rally at this point is likely to see a pullback to test the low rather quickly and continue the downward trend. A washout, fear based panic sell off is more likely to put in a solid bottom. Perhaps Apple's weak earnings report after the close yesterday will ignite such a sell off. Buying when things look their worst is usually a good play. But again my guess is that it will pay to sell rallies until the market proves itself. If I do jump into the C and/or S funds, it will likely only be for a few days at a time.
I'm starting to get interested in bonds again over the G fund as a safe haven from stocks. It worked out in early August for a short term play and we are now seeing a similar setup. Our stat wizard Jason Geopfert at www.sentimentrader.com tells me that small position bond traders are very bearish and are shorting bonds at historic levels. Even higher than we saw in March and early August.
Chart provided courtesy of www.decisionpoint.com
While bonds do appear to be making a longer term turn for the worse, I believe they are setting up for a little short term rally.
After being planted firmly in the G fund for the majority of the previous several months, I am in trading mode again. I think money can be made if you can catch a rally and quickly step aside. My experience tells me that both upside and downside action tends to last longer than you would think it would so I am hoping for a better setup. A gap down open Wednesday could give me that setup. A flat to up open would not.
So, I will either jump into stocks on any panicky type selling, or I will move money into the F fund and wait. Either way expect an interfund transfer announcement here soon.
That's all for today. Currently 30% G, 70% I fund. Thanks for reading.
There is more than one way to approach this market and what you do depends on your market strategy. The market is looking bad, that's a given. Investors who dollar cost average into their TSP accounts are now buying more shares at a lower price than they were a couple of months ago. The key for them is to continue to invest and not let the market swings affect their plan.
I on the other hand like to take advantage of market swings. The main reason I do this is to try to avoid losses whenever the market is either overbought or in a down trend. Anyone can make money in a roaring bull market. Not losing money when it is down is the key to beating the market averages, which is my, and most market timers' goal.
The reason I bring this up is because we are in a time when traders are thinking one thing and investors another. I can see a rally coming here soon and that could benefit both short and long term traders. But I believe that a rally here will be short lived and the traders and investors will then go their separate ways. It's what makes a market. Someone always has to buy when someone else is selling.
After another positive open turned into negative close, the S&P 500 is at some support levels; Both the longer term rising trend line, and it happens to be at the low made the day of the London terrorist attack back in early July.
Chart provided courtesy of www.decisionpoint.com
A rally at this point is likely to see a pullback to test the low rather quickly and continue the downward trend. A washout, fear based panic sell off is more likely to put in a solid bottom. Perhaps Apple's weak earnings report after the close yesterday will ignite such a sell off. Buying when things look their worst is usually a good play. But again my guess is that it will pay to sell rallies until the market proves itself. If I do jump into the C and/or S funds, it will likely only be for a few days at a time.
I'm starting to get interested in bonds again over the G fund as a safe haven from stocks. It worked out in early August for a short term play and we are now seeing a similar setup. Our stat wizard Jason Geopfert at www.sentimentrader.com tells me that small position bond traders are very bearish and are shorting bonds at historic levels. Even higher than we saw in March and early August.
Chart provided courtesy of www.decisionpoint.com
While bonds do appear to be making a longer term turn for the worse, I believe they are setting up for a little short term rally.
After being planted firmly in the G fund for the majority of the previous several months, I am in trading mode again. I think money can be made if you can catch a rally and quickly step aside. My experience tells me that both upside and downside action tends to last longer than you would think it would so I am hoping for a better setup. A gap down open Wednesday could give me that setup. A flat to up open would not.
So, I will either jump into stocks on any panicky type selling, or I will move money into the F fund and wait. Either way expect an interfund transfer announcement here soon.
That's all for today. Currently 30% G, 70% I fund. Thanks for reading.
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