Once again volatility stole the show as an early 100 point gain in the Dow turned into a midday loss, but a late rally brought the index back to a very respectable 68 point gain.  Once again small caps lagged as the S-fund finished down on the day - as did the I-fund. 

         


The G-fund did pay its penny gain yesterday as we anticipated, and the F-fund rallied a couple of cents as the AGG filled the gap we talked about yesterday.  See the AGG chart in yesterday's comments.  Further short-term gains in the F-fund may be tough as I'm looking for a temporary pullback - based purely on technical analysis - but the recent credit woes may just keep rates falling and the F-fund higher.

We saw a break in support in the S&P 500 yesterday before an oversold rally took the index back above support and above the 50-day moving average.

I had mentioned yesterday that any more losses would probably bring with it at least a dead cat bounce.  I think we saw the some of that during yesterday's late afternoon trading.  If you were on the message board yesterday you may have noticed that I made a small buy into the C-fund before the deadline (70% G, 30% C).  I did not send out an email alert for a few reasons:  First, I can't believe anyone really cares what I am doing considering my return lately.  Second, I made my final decision very late.  And third, and most important, I was not real comfortable seeing others jump into the market while the it is potentially in a "falling knife" category.  It can be very dangerous; particularly if you can not be nimble.

Nearly 15,000 people have added their email addresses to our email alert list and I know not all of them are reading these comments daily.  So I thought it would be irresponsible for me to tell 15,000 people that I think it's time to buy - when I could not really explain to them the risk involved as well.  I have also been hoping that the success of the site's systems would take a little attention away from what I am doing.  I plan to use them more myself.

Now I am going to contradict myself.  As much as I believe the market presents more than moderate risk going forward, it is also very oversold, the last 3 days in July are very strong historically, and the EbbChart System is looking for a big positive day on Friday.  


                               Chart provided courtesy of www.decisionpoint.com


                                 Chart provided courtesy of www.sentimentrader.com

So, I may make another ONE DAY MOVE into a higher stock allocation.  I haven't decided exactly which funds yet, but I will by the deadline.  The small caps have been lagging but could bounce big if they do rebound.  The dollar rebounded big yesterday and we may have seen a temporary bottom there so I will likely avoid the I fund - even though it is also due for a rally.  But it has to deal with the dollar.

Trader Fred's TSP Trader System remains on a sell signal and still has not seen a move up on the strength chart.  This is the main reason I am not getting very bullish during the current slide and worry that any bounce will be short-lived.  Read Trader Fred's commentary of the system page.

The EbbChart System is in the I-fund today and is also looking for an unusually large gain on Friday.  Read more the ebbchart system  page.

We have had another bout of bad news on the credit front and it looks like the market will open deep in the red.  Look for a possible email alert or a post on the message board this morning for an interfund transfer announcement - for those who still care what I do for some reason.  This is certainly in that category of trying to catch a falling knife, which can be dangerous so please consider your situation before acting.

By the way, after two steep declines from its parabolic move to new highs earlier this year, China's Shanghai index has again regained all of those losses and made another new high last night.  The bubble continues there.

That's all for today.  Currently 70% G, 30% C fund.  I'll see you back here tomorrow.

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