Remember this 1994 chart of the S&P 500?  How could you forget?  I only mentioned it every other day for a month... or two.   I was waiting for that pullback (point A) and we had one (that ended the day of 1st the London attack), but it was a mini pullback compared to 1994. 


                                Chart provided courtesy of www.decisionpoint.com

Here is the current S&P 500 chart.  You can see point A below came up short when we compare it to 1994.  The short term indicators were oversold but the longer term still suggested more downside was due.  So I stayed out of the stock funds.  But the S&P continued up.


                               Chart provided courtesy of www.decisionpoint.com

Now look at the current chart of the Dow.  To be honest I don't look at the Dow chart too often so I just noticed this.  Look how much deeper the sell off was last month.  It is almost identical to the 1994 S&P 500 chart.  Also notice the Dow did not make a new high yet but the S&P 500 has.


                               Chart provided courtesy of www.decisionpoint.com

In 1994, the rally that followed that point A pullback lasted two months.  The current rally is just barely one month old.  But again the S&P is reaching new highs already where in 1994 it took that two months.

I've heard 1998 mentioned a lot from various analysts, probably bears, who are likening the current summer rally to the 1998 summer rally.  There was a five week rally that went basically straight up.  Almost as quickly the rug was pulled out from under it and there was a sharp sell off.  A 21% sell off. 


                              Chart provided courtesy of www.decisionpoint.com

Yes, since my 100% G fund allocation in mid-June the S&P 500 is up 2.5%.  It's not fun being on the sidelines watching the indices eke out a gain every day.  But even worse would be being in the market and thinking every down day was another buying opportunity in a situation like the summer of 1998.  My account is safe (but a little sorry) but it is protected.  Those of you who have read these market comments from the beginning know that my indicators are not always timely, but they have been very good at sniffing out the next larger move.  Missing 2.5% is the risk I took by being defensive but it could pay off.  Missing a 21% sell off, or anything close, would be the reward.

If you time the market you know how it goes when you are fully invested and the market starts to drop.  If we get a couple of down days you say, "I'll wait for the next up day to get out."  Then we may get a flat to down couple of days and you think, "Surely there will be a little rally soon."  Then you start thinking, "Well, I came this far.  I might as well stay invested.  After all, I'm in it for the long haul."

Sound familiar?  Kind of how I feel now on the other side, but again I'm protected during this flashing yellow light.

That's all for today.  Currently 100% G fund.  Thanks for reading.