Busy week
After
seven consecutive positive weeks, the Dow and the
S&P each ended last week in the red. No big
deal. In fact it's more than healthy for
stocks to take a breather, but how much of a
breather will stocks need?
Last week's action whipsawed me. I hope you
did a little better. After the early Thursday
morning break of the 1522 area on the S&P, I decided
to try to take some of our recent gains of of the
table. Unfortunately by Thursday afternoon,
after the TSP deadline had passed and before we were
out of the market, stocks began a steep decline into
the close. We were out by Friday morning but
of course, as we anticipated, Thursday's steep
sell-off set up a modest rebound, albeit on
light volume.
That's where we begin today. Not all markets
were closed yesterday and China's Shanghai
Composite, which is NOT part of our I Fund but is a
major influence on other international markets, as
well as the U.S. markets, has now broken above the
long-term resistance we have been watching.
Last I checked, a new high of 4323.91 was made,
almost 100 points above the 4231 resistance area.
The parabolic move continues and where she stops,
nobody knows. If you look at this chart, you
can see the index has more than quadrupled in the
last year or two, but 50%, 60% or even 80% pullbacks
are not uncommon. It will be interesting to
watch what happens from here, the top of the
long-term trading range.
Chart provided courtesy of
www.decisionpoint.com
We have a busy week on the economic calendar, with
the important jobs report being released on Friday
morning. There is still much speculation on
what The Fed will do with interest rates and these
reports may give us more clues.
The
TSP Trader System remains on a buy signal
but there is some activity going on as one submodel
gave a sell signal, and another gave a buy after
Friday's close.
I wanted to point out that, although system gives
buy and sell signals, it is more of a buy / don't
buy signal. Trader Fred might need to correct
me, but I see the submodels as a group of individual
signals telling us when it is a good time to buy.
A lack of a signal in a submodel means the favorable
market condition which particular submodel was
looking for, is not present. But another
submodel may see something it likes. When none
of the submodels are in the market, we say the
system in on a sell signal, but it really means it
doesn't see anything in the market at the present
time, that has consistently shown favorable market
results going forward - hence, don't buy (hold
cash).
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