Short and sweet.  Well, short anyway.

I'm going to make this quick today because the market is making it very tough for anyone who thinks they know what they are doing.  The aggressive got burned yesterday and the conservative who only had 35% in the S fund (us) were also hit hard.  I'll give what's left of my brain a rest and see how things play out.

The selling the past couple of days has brought the short term overbought / oversold indicator into oversold territory.  That puts the market is in a position it has been in many times recently - that is where we should see an oversold bounce but if we don't get that bounce we can consider this a longer term change in the nature of the market.  Things can go smoothly and we get a bounce, or things can get ugly and we see some serious selling. 

If we take a step back we see that the S&P 500 is still only about 1.5% off it's recent highest closing point.  That's the good news.  The bad news is that the S&P 500 is still only about 1.5% off it's recent highest closing point.  Do you know what I mean?  The market is not technically in bad shape but we have not seen any real pullback yet either. 

Being 65% in the G fund I thought I was being pretty conservative, but that 35% I had in the S fund as a "just in case" we continue to rally, really put a dent in my already overly conservative return.  The I fund was hurt the most yesterday, which we kind of anticipated (see yesterday's comments below) but the extreme weakness in the small caps when compared to the very modest loss in the S&P 500 yesterday was quite surprising.  Rising interest rates are not good for small caps but rates have been rising for many months now.  Perhaps that rotation from small cap to large cap stocks is finally taking place after small caps have outperformed for something like eight years.

So the S&P 500 did penetrate below the higher end of our support level targets (1275) but the close was just above it making for some mixed signals.  If you are bullish you would be thinking this is a good spot for a buy, and it may be whether you think short or long term.  But if you are bearish you may be looking at any strength as a gift to sell into. 

On sentimentrader.com their overall smart money indicator is at 50%.  (60% and higher is a buy signal, and 40% and below is a sell).  The overall dumb money indicator is also at exactly 50% (40% and below is a buy signal and 60% and higher is a sell.)  If you are confused as to which way the market goes next, you are in the company of many smart and dumb investors alike.  Don't fault yourself if you end being wrong and don't get too comfortable if you end up being right.  The market will always get another chance to humble you.  I live on Humbled Lane.

That’s all for today.  Currently 100% G fund.  Thanks for reading.  See you tomorrow.
 

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