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Trading the Stats: Week 17

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The markets continue to reluctantly trudge ahead, climbing the wall of worry, while leaving the naysayers behind.

There isn't much else to add, it's sort of a sleeper, where prices are creeping up inch by inch. While the S&P 500 has thus far had a very average (middle of the road) statistical month, W4500 has fared better on the weekly timeframe. And for those who are still drinking the bear cool-aid, both SPX & W4500 have closed up 10 of 16 weeks. Adding to the confusion, AGG has closed up 11 of 16 weeks, but can both stocks and bonds be right at the same time? The answer (from my limited perspective) is that this is an irrelevant question, these are two different trading instruments, both with the ability to operate independently from one another, for extended periods of time.

Based on where we are at this stage in the month, I expect SPX to close around 2% with potential for another 1-2%, if we put in a strong week 17.
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As we retrace higher ground (while looking for air pockets of resistance), the charts have been reflective of the hesitation we're seeing. I was a bit worried earlier in the week when we tagged a 2111 high, I happen to think that investors believe in solid round numbers (hence my 2121-2222 projections), and a 2111 top certainly fits the bill. For the chart below, I've raised the Fibonacci levels to the previous major top, and extended the trendlines. I've also kept the 2020 support level, because I do believe we will test it again this year. But in the end, I honestly don't care where the markets go, I care more that I react to them properly.
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For ESD, as previously mentioned, the side-step into the F-Fund earlier in the month was a complete dud. This often happens when you try to play stats on the daily timeframe with TSP's end of day prices. Still, the system has largely been right in the sense that the S-Fund has been gaining performance against the C-Fund. For those with 1-IFT to burn, we are now entering the last week of the month. From the chart below, we can see the month of May shows a transition, small caps appear to take a back seat to the F-Fund, and I'll be curious to see when (or if) this happens. I've done some primitive historical analysis in the past, and the old adage "Sell in May and go away" can indeed be very true, but it isn't true in all cases, so I wouldn't blindly follow this advice myself.
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The ALPAFS PnF system is perhaps the most truthful, with an unbiased view of the current price action. We are bullish, all the major indexes I track (SPX/W4500/TRAN/NDX) have bullish price objectives. Unfortunately, I don't have the time to cover all 4 charts, but I can tell you NDX (NASDAQ 100) is the weakest, but still stopped just short of a reversal, and put in a double bottom. However, this system is designed to work together in unison, and it takes more than 1 index to trigger a sell.

An interesting note, the SPX price objective has been raised from 2164 to 2333. PnF price objectives are based on either a mathematical vertical count or horizontal count of the price movement within columns. I have been able to "mostly" duplicate these formulas, but in the end I see it as more of a predictive tool, rather than an indicator I would base my expectations on.
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For myself this week was half a win. By leaving the C-Fund for 2 days into the F-Fund, I gained performance against the C-Fund, but lost performance against the S-Fund, which is the fund I ultimately entered. For now, I plan to ride out the remainder of the month invested, looking to re-enter May with a fresh re-load of IFTs.

Trade hard…Jason
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SPY (C Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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