Monthly Archives: April 2013

Hello everyone

Doing some market analysis tonight…the main “headline issue” and great news is that today, 04/30/2013, the SP 500 index hit a historical, never before touched, all time high, closing (closing price is always better than intraday price activity) at 1597.57.   See chart below with comments.

This month, the I-Fund has had some bursts of life, and April TSP data will possibly reflect the I-Fund as the April top performer, however this is not necessarily a reason to switch to I-Fund.   This does however require that the I-Fund be monitored for continued positive performance and after everything is assessed, we can entertain a possible move.  S-Fund and C-Fund are doing well also, and I am personally still 100% S-Fund.

I should add that the “general public” is still skittish about returning to stocks,  however as this market uptrend (hopefully) continues, people are going to want some of the action and ease back into the market.  At that point, the trend (as people enter the market, having been in the bleachers watching things…) will then likely grow even stronger.

Again, today witnessed great news, in the form of the historical all time high in the SP 500 Index.  The occurred on slightly above average volume, I would have preferred a little more volume, but I will take what I can get right now.

I remain 100% S-Fund and will be monitoring the I-Fund.

Also, please see FAQ section as many have sent me some valid and great emails this month and I put some in that section.

Thanks for reading, and if you find this site and the updates useful or informative, please pass the word.   Thank YOU

– Bill Pritchard

Hello everyone

The markets have rebounded from last week’s dismal performance, which was arguably caused by the tragic events surrounding the Boston Marathon, poor economic news from China, and other factors.

As we know, the suspects in the Boston Marathon incident are either dead or in custody, due to the great work and cooperation between members of the public, and our law enforcement and public safety community.   There is no doubt that their quick capture/demise “sends a message” to the world, and as we finish up this week’s trading, the markets have (not surprisingly) rebounded, as uncertainty and questions regarding the Boston incident are now able to be addressed.

Some have emailed me and asked me why I did not panic regarding last week’s downtrend.  As most of you know, I use a combination of fundamental and technical analysis, combined with historical “look back” at similar events and situations when I see the market begin to stumble.   One of my tools in my “toolbox” is the use of Moving Averages, which in simple terms is a moving trend line which responds to the price activity of a stock or index.  A very popular Moving Average is called the “50 day Moving Average“, and my backtesting and research reflects that as long as a stock or index closes (not intra-day price behavior but closing price) at or above this line, then the trend is likely to remain intact.  Multiple closes below this line is a warning sign (coupled with other data and information prior to pulling the sell trigger).  My use of Moving Averages was documented in an article written by me, published in the January 2006 issue of Technical Analysis of Stocks and Commodities Magazine, which is sold nationwide at Barnes and Noble.

Lets take a look at the CLOSE ONLY price performance of the SP 500 last week.   See charts attached.  First chart is normal price chart, showing high, low, and close, second chart is close only with no comments, second is with comments.

As we can see via the above charts, the same information becomes more clearer depending on how it is viewed.   Time allowing, I like to use “close only” charts when we hit speed bumps in the road, and by combining this with other data and information, I am typically able to make a decision and rest better knowing the decision was made with all available information.

On April 13, 2013, I posted some commentary regarding the Boston Marathon bombing and how the market may respond.  In support of that post, I went back to some historical events, to include the 9-11-2001 attacks.   The markets at that time (let’s remember, behind the markets are people and emotion) responded initially with a downtrend, then rebounded strongly and went up.   So my crystal-ball (which rarely works but I still keep it on my desk….) told me that unless human beings got reinvented and the new 2013 versions of humans on Wall Street did not have fear, greed, panic, hope, etc running through their veins, then the market response to Boston would probably be similar.

It turns out that my crystal ball decided to work, as a look at chart one above, shows an apparent “U turn” or reversal to the downtrend and an apparent resumption of the uptrend.    Time will only tell if this uptrend continues.  We are seeing some resistance in the 1575-1585 area.   Most will remember that 1576 is the prior all time high, dating back to 2007 (already penetrated), and is still recent enough to be a significant area, and any close above 1576 is a positive.  1597 is the newest recent high, achieved on April 11 2013.  Anything above that represents new territory and further confirmation of the uptrend.

On 04-25-13, the SP 500 climbed thru the 1575-1585 resistance area and was able to hit 1592 intra-day, before closing at 1585.   So we are seeing some definite attempts to get up to new high territory.

If all that sounds like Greek, in summary, any SP 500 price action above 1576 is good news, and as of now, the the next goal is price action above 1597.  Anything below 1570 is indicative of sickly performance and this will require close monitoring of the index.

I continue to advocate to use the SP 500 Index as a “big picture” view of the markets.  Some have emailed me, asking why I don’t use NASDAQ or the Dow.  The NASDAQ is susceptible to being driven lower by major NASDAQ members such as Apple (AAPL), which has suffered some setbacks to its stock performance in the last few months.  However just because AAPL is going down, does not mean that the entire stock market is going down.   The SP 500 is 500 stocks and in my opinion offers a better assessment of market health.

With that said, I am still 100% S-Fund, as it appears that the S-Fund will perform best this month (or “least worst” given the various market issues this month).

Thank you for reading.   As always, if you find this site useful or informative, please forward this to your friends and coworkers and encourage them to sign up for free email updates.  Thank You

– Bill Pritchard

NOTE: This Post was originally going to be published April 15 but I then decided to wait for the markets to open and close on April 16 and then assess things.

On April 15, 2013, the markets closed significantly lower, which most have theorized is a “panic response” to the unfortunate tragedy surrounding the Boston Marathon.  Shortly after 2:30 PM, the SP 500 ETF, SPY, traded an abnormally high number of shares to the downside, adding credibility to this theory.   It continued lower until the market closed.

This type of event, is considered a Black Swan Event, a concept discussed by Nassim Taleb.   This type of event is unpredictable and sudden.

Evening SP 500 futures found support, and did not trade lower than the prior daytime session.   This is somewhat reflective that calmer minds came into the picture and bought SP 500 futures (versus sell them).   Typically, the evening futures market is predictive of the next day regular stock market, which will be 04-16-13.

I feel it is important to take a look at the SP 500 index, going back to Sept 11, 2001, the worst act of terrorism on US Soil.   See below chart

It can be seen that after the initial panic response to this major terrorist event, the markets subsequently rallied, which would be a response not typically expected.   It should be noted that the market subsequently did crash, but this is not associated to 9-11, but to larger problems which existed big-picture, as most will remember many “stock market scandals” during the 2000-2002 era, such as Enron, WorldCom, Tyco, and others.   So 9-11 did not cause the markets to crash, and as noted here, once things calmed down, the markets rallied after 9-11.

Lets take a look at tonight’s SP 500 futures, as of 10:20 PM Central time 04-15-13.   You can see how the futures have “found support” and not traded lower than the day session.

On April 16, the markets rebounded, likely due to people reaching some reasonableness from a trading standpoint with the Boston Marathon situation.   All indexes rebounded strongly, with heavy volume and the indexes closing up.  Mid and Small-Cap stocks responded best on April 16.

The SP 500 closed at 1574, which is slightly below its previous all time high of 1576 set in 2007.   While the markets remain volatile and sensitive, I am remaining 100% S-Fund for the present time.

Thank You  – Bill Pritchard

Good Morning folks…

I say good morning because my computer clock says 01:20 AM, and once again I can’t say how cool it is to get the emails that I get from you guys.  We have a few talented “market watchers” in the audience, I had some of you tell me the SP 500 hit a new high.   Guys, I don’t want to sound corny but that is awesome.  Well at least I think so anyway.  Lets take a look at this weeks market action.

As everyone knows, on April 6, 2013, almost one week ago, I advised everyone that I was making a move to G-Fund, due to market behavior and the North Korea situation.   I am now moving back to S-Fund.   Here are my reasons.

1.   Maybe just me but I get the sense that the world is growing weary of North Korea’s statements and threats and the world is resuming their regular programming.

2.  The SP 500 itself is making new highs.  At the end of the day, don’t argue with the markets.

3.  The S-Fund is still the top performer, however on 04-11-13, the I-Fund really performed well.   Lets see if this is a one-day thing or maybe the start of something with I-Fund.  C-Fund is closely trailing S-Fund.

Please see below charts with notes on the charts themselves

Last week, we had some definite “yellow caution lights” which were 1) the market itself displaying some distribution days, 2) saber-rattling in North Korea, and 3) a couple of economic reports which didn’t help people’s moods.   While everyone loves gains, nobody likes a loss, and I am very loss-aversive regarding my TSP balance.   If I can keep the damage down to a minimum, then the scoreboard will take care of itself.   But if I recklessly pursue gains, I stand the chance to get hurt.   We had some nice gains Jan/Feb/March, so I prefer not to just throw those away.  Maybe I am rambling and I need to sleep but I think you see my perspective.

With that manifesto said, I will be moving 100% to S-Fund.   The markets have apparently resumed their uptrend, with the SP 500 penetrating the 1576 level, making new highs.   This is a milestone event.

In other news, some may have seen reports that PC sales are at all time lows.   As most know, the Macbook / Mac computers are not classified as PC’s.   With the popularity of Apple products, and Android tablets and devices, the PC just is not the hot thing anymore.  I predict demise for Microsoft (whose Windows 8 OS has received poor reviews) and related problems for antivirus vendors, who primarily service the PC market.   Apple products reportedly does not need antivirus but I am sure that will change.   This bad news hit the NASDAQ index, and dragged it down somewhat.

As a MacBook Pro Retina owner for travel, and Windows 7 Pro owner at home, I have to vote for Apple.  Dealing with Windows updates, firewalls, blue screens of death, etc etc just isn’t fun, not when the Apple just works.   When I have to become a semi-PC hacker and change system registry settings just to get Skype to work or so a Security Pack update will install itself, then what happened to the concept of ease of use for the customer.   Its not a shocker why Apple is taking the lead.

Thanks for reading

– Bill Pritchard

Hello everyone

This week has been interesting to say the least, largely due to some market nervousness and response to the tensions in North Korea.   Some negative economic data has come forward, such as a disappointing jobs report and a guy named David Stockman who popped out of nowhere with a new book to sell.  He claims that the world as we know it is crashing.    Maybe, maybe not- but there are two sides to every story, most of my audience knows that.

This prompts me to ask, “Is war good for the markets?”

War is never a good thing.  But if we look at the past two conflicts in which USA targeted a sitting dictator/regime, both the 1991 Gulf War, and the 2003 Gulf War-2, the markets rallied strong after we invaded.   See charts below.

The invasion of Afghanistan occurred in October 2001.  2001 was a time of market problems and scandals, as some may remember the Enron, WorldComm, Tyco, etc financial scandals.  The previously-run-up NASDAQ was crashing, having started its decline in 2000.  That was a falling knife nobody should have tried to catch.  The markets were flat during 2001 for the most part and the Afghan invasion did not affect the markets much.

So what happens if we target Kim Jong-un, a sitting dictator in North Korea, next door to South Korea, our allies and location of Samsung, Kia/Hyundai, etc ? Are there any similarities we can associate to Saddam and Kuwait ?    Will the markets respond the same ?

Moving back to market and TSP matters, the markets this week had two days of “distribution” (a term pioneered by William O’Neil of Investors Business Daily), which indicates selling by large institutions.

Since I am a believer of “react to the market, don’t try to out guess it” and “the market is always right”, my opinion is that 100% G-Fund is prudent right now.   No, I do not believe the world is crashing nor that the markets are headed straight down.   However in light of the North Korea tensions (not a big deal just a potential nuclear missile launch…), and the fact that we have had some nice gains since January, my opinion is lets lock those in and make a precautionary move to G-Fund.   

As always, if you find this site informative and/or entertaining, please share it with others.  If, at the very least, I have triggered a new interest in how the markets work or a desire to be more hands-on with your TSP, then I think that is very cool.   Thanks everyone…have a good weekend.

– Bill Pritchard

S-Fund was top performer in March.   See graphic below.  S-Fund is YTD best performer also.   For the third month in a row, this site has correctly identified the top performing fund(s) , out of ten possible choices that exist, using proprietary methods that I personally developed over almost 20 years of trading and investing experience.   We delivered (again) in March, with the opinion that the S-Fund would be the best performer.

Please continue to use this website for insight and opinion on market action and TSP fund performance.   I am 100% S-Fund at the present time.   Please pass the word about this website if you find it useful, entertaining, or at the very least has caused you to find some new interest in how the markets work.  Next stop is SP 500 – 1576.   Lets keep our fingers crossed.   Thank You – Bill Pritchard