On Friday I mentioned that I would likely move out of stocks if we had another low volume rally. I guess I waited one day too long as we had a pretty good sell off on Friday. So I did not make a move. I'm still fully in the stock funds.
That is what makes it tough to play these short term wiggles in our TSP accounts. It rarely pay off for me. I am so much better off when I play the weekly game rather than the daily one. You may have a little better luck than me since you can make moves right up until the deadline. I need more time so I can send out the email alerts and update the message board. I'm probably better off that way actually.
So what's next? To be honest, I don't have a good feel for what will happen in the coming days. We could go back and test the 1163 area on the S&P 500, or even go just below it. We may simply waffle around where we are now, or we could just rally from here. How's that for a prediction? I do believe the downside is limited, even if we do have to get one more push down. Since we are somewhat handicapped in our TSP accounts, I will likely remain fully invested since Friday's action may have helped get us get closer to that rally. Don't get me wrong. We could see a few days of weakness as I said. I'm just thinking I can't be quick enough to take advantage of it, and since the downside may be limited (I'm hoping) I'm not going to mess around. If I had to guess, I'd say a move down to 1171 is possible, right where we have drawn a new bullish trend line. If that doesn't hold, 1163 now has a double support line...
Chart provided courtesy of www.decisionpoint.com
Friday's 80 point sell off on the Dow was on the lowest volume of the year. What does that tell us? Well, we have been thinking that we could get one more fear induced sell off before a rally, yet the low volume tells us the larger institutional investors were not bailing. More of an indication that the "smart money" thinks it is about time to be a buyer, not a seller.
Oil was down nicely on Friday and it marked the first time in a while that the market went against the pattern of being up when oil is down. This could either mean that oil is not going to be a major factor heading into earnings season, or it could mean that investors aren't impressed with a drop in oil and believe it will just go back up. Who knows? It was a low volume day and and we shouldn't read too much into anything I guess.
As far as the I fund goes, I just can't get a good short term read on the dollar. It seems to be trying to bottom but the day to day swings could go either way. The risks are there but the payoff could be good. The EAFE index seems to be coming out of the recent pullback but again a rising dollar will hold up the I fund, but if the dollar falls there could be some very nice gains. You'll have to judge your on risk tolerance.
That's all for today. Many of my short term indicators say it is best to be buyer right now. They could be wrong but I'm playing the odds. Currently 60% C, 40% S fund. See you tomorrow.
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