Still treading lightly. Time to step aside again?
I seem to be finding more and more reasons to stay out of the market. Maybe that is a sign to get in. I have to ask myself if I am looking for reasons to be out or am I actually reading things correctly.
It is possible we could waffle
around for several more weeks where staying out won't hurt. But if
we get a decent rally in here, I'd like to take advantage of it.
So what are the chances of a rally? Let's look at more charts
while I think out loud. I'm looking for some logical, technical,
or psychological reason to get in or stay out. Here is the S&P
500. Where is the support here? The 200 day ema (blue line)
is the closest I see and it is 30 points below.
Charts provided by www.decisionpoint.com
The S&P 500 has now been down 5 days in a row.
That doesn't doesn't happen very often in a bull market. We are
due for an up day but technically, things aren't looking very good.
How about some seasonal data.
The last few days of March are historically pretty bad while early April
is quite good. Today is the 19th trading day March. The
chart shows that the 20th through 22nd trading days don't look very
promising. Perhaps we have that up day today but get another sell
off Friday through Tuesday? Maybe this is a bit of micro analysis,
but I'm looking for reasons to buy or sell.
Chart provided by www.sentimentrader.com
Psychologically, we still don't
see the fear you would like to see when you are bottoming out.
While it is getting better (bullishness is coming down) the bulls are
still out numbering bears 2 to 1.
You begin to wonder if your thoughts are based on solid risk / reward decisions, or out of emotion where you should probably go against your feelings. Am I looking for reasons to stay out since my gut tells me not to get in? Possibly, but this is a better safe than sorry situation since we really haven't seen any good reason to buy yet.
After everything I have posted, I have come to the conclusion that today may be the best day to be in but after that, very sketchy. If you are in 25% already you have to decide if you are OK with that. I think I will step aside again, going back to 100% G.
That's all for today. Currently 75% G, 25% S fund, but initiating another transfer back to 100% G fund. It will be effective on Friday. See you tomorrow.
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Highlights from Wednesday's Comments (see archives on left for full
article):
Yesterday was a weak attempt at a rebound but the bears did not pounce on it either. There is still the risk of more downside action. It may take the next wave of earnings reports due out in early April to ignite some optimism. Until then I'm still stepping lightly.
As you may or may not have seen, I initiated a transfer yesterday morning. I put a very timid 25% into the S fund. I could have very easily stayed 100% in the G fund but as the deadline approached, it looked like we were going to sell off again. It turns out we just flip flopped the rest of the day and ended up pretty flat. That may be the way it is for a day or more but I still expect another push down before we head back up. I believe you will have a better opportunity to get in, but you can also move in slowly, a small amount at a time. Trying to pick the exact bottom could hurt you if you are wrong. I'm not smart enough to know when that is but I do occasionally try it. This time I may be better off inching in.
I am not a big fan of these partial allocations because if we go up now, I'll wish I had gotten more aggressive. But if we get hit hard again, I'll wish I had just stayed out. At least I'm only 25% exposed but it's a very noncommittal allocation, leaning toward the defensive side.