I spent a lot of time this past weekend updating sections of the website including the longer term comments and the daily comments, and I forgot to send out the reminder email alert. Even though I update the comments every weekday, I usually send out that reminder on Monday mornings so you can start the week out with something to think about. I didn't want anyone to miss the year's first comments so if you get a chance, try to check out the January 3, 2005 comments.
If you read those comments you know that I was speculating that we will be seeing a pullback but I really wasn't expecting it until after this week, or at least until after the first three trading days this month. With a very weak day behind us, particularly in the small cap stocks of the S fund, I wouldn't be surprised to see a bounce today. I don't know if it will hold but the 2nd trading day in January is historically very strong. The third trading day is also above average but nothing like the 2nd.
Last week I had been saying that the converging trend lines (in red, called a rising wedge) will have to give one way or the another. Late Friday that wedge brokedown slightly to the downside. That was a hint of things to come but I was still hoping that the strength of the early January trend would keep the rally going. Now I think we need to prepare for the possibility of more weakness. I would like to take advantage of a possible strong day Tuesday to lighten up some.
Charts provided courtesy of www.decisionpoint.com
I am currently 50% S, 50% I fund but I will initiate an interfund transfer this morning moving to 40% G fund, 30% C, and 15% each in the S and I funds. This new allocation takes effect Wednesday.
Don't forget to check out yesterday's comments below if you missed them. See you tomorrow.
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