This is the tough part

Yesterday I mentioned getting out of stocks on any strength.  Things were looking good early as the Dow was up about 40 points near the open.  I was considering initiating a transfer but the market started to give back those gains.  As the deadline approached it was evident that we were not going to see a strong day, so I remained in the S fund.  This is the tough part.  Should you do what your emotions tell you on a day like yesterday, or should you stick with the plan that this week will be volatile and the market should give a us better opportunity?

The reason I stayed in stocks rather than jump out is unfortunately the same reason I missed the November / December rally.  I believe there will be a reversal back up sometime this week to give a better exit point.  Something similar to what happened in the last week of 2004.  Remember this chart?


                           Chart provided courtesy of www.decisionpoint.com

The second black bar in that red square above, the one that shows a big down day, represents the action of the day after the Christmas weekend in 2004 (Mon. Dec 27.)  The following day, Tue. Dec 28, saw a big reversal up as it gained back all of the prior day's losses and then some.  As I mentioned yesterday, the low volume will bring with it volatility.  Let's hope that is true now.

So I'm still looking for a strong day to make my move out of stocks.  That means I will have to wait as long as possible before the deadline to initiate any transfer to make sure we don't give back early gains again.  The market could be in for some intermediate term trouble as I have been anticipating, but we are in the middle of the strongest seasonal week of the year and we are likely to see buyers step up before it is over. 

Bonds looked good again on Tuesday.  They could take a breather here in the short term but the F fund could continue to be the better safe haven when not in stocks.  The G fund paid its penny gain Tuesday. 

Again, I apologize for the short commentary.  I am still working on some other site features and I'm trying to get it all done this week.

That's all for today.  Currently 100% S fund.  Thanks for reading.