Monthly Archives: June 2014

Hello Everybody

This update will be brief, many of you are out next week due to the July 4th holiday…by the time you come back and check your emails, this will be buried at the bottom of the inbox.   With that said:

I remain 100% S-Fund, as that fund, representing small-cap stocks, reflects the top performer currently.   Second runner-up is the C-Fund, representing large-cap stocks and the SP 500 Index.   Folks who are 50%/50% S and C-Fund have a fine allocation, nothing wrong with that.

At the present time, I see no “red flags” or “warning signs” by any of my proprietary indicators to indicate problems ahead.

Iraq tensions remain, however open-source media seems to paint a stabilizing picture in the region.   Time will tell, however crude oil prices have come down somewhat, to $105 a barrel, off their Iraq-panic highs of $107.   If we could get crude below $105 and even miraculously to $103, that would be great.  Ukraine/Russia continues to be an issue, although I have lost track on what “cease fire” or “agreement to pull troops back” we are on now and quite frankly have grown bored with that situation.

I-Fund lags all the other funds, not a surprise due to its international nature and various international markets suffering due to perceived risks and problems.   One interesting development is a deadline of June 30 for Argentina to pay back $1.3B worth of debt it owes to bondholders.   If that date passes, they have an additional 30 days (the way I understand it) to reach a solution (probably August 1) with bondholders or the various credit ratings will consider Argentina in “default” status and downgrade its credit worthiness rating.   This will likely kill Argentina stock markets and may affect ours, temporarily.   Based on my research, most large USA investors in Argentina have bailed out by now, as Argentina is a “we heard this song before” situation.   In the end, speculating how it will affect US markets is playing crystal-ball, and mine never seems to work.   The financial media has not (not really) talked about this story extensively, but I expect it to pick up some traction in mid-July.

Note that the US markets close on July 3 at 1PM Eastern Time, and are closed entirely July 4.   Expect low volumes this week, and any “down moves” are really nothing to loose sleep over, unless on huge volume.   Most market players will be out of the action by Tuesday afternoon, as they (or their drivers) drive east to the Hamptons for the long weekend.

I promised to keep this update short, I get to typing and tend to ramble, my apologies.  

Please continue to share this site with your friends and coworkers, the “stickiest” marketing is word of mouth referrals, from you, to the next guy.   This site has grown tremendously in a short time, and this is largely a result of your referrals.   Thank You and if you believe this site continues to add value to your financial situation and enhance your knowledge of the TSP and markets, please share it with the next person.    I have chosen to not get too wrapped up with pumping out Twitter feeds, Facebook, Google+, etc. etc., and instead focus on delivering a quality, simple to understand, product, to you.  That formula seems to work.  Ultimately, this is your site, designed to benefit you, the TSP participant and other market investors who desire to improve their knowledge and performance.

My TSP Allocation remains 100% S-Fund.

Everybody have a great July 4 holiday !   

– Bill Pritchard

Ok, drum roll…..can anyone guess what is rattling US Markets ?   Who would have guessed ?   Middle East problems and instability. 

First, my TSP Allocation remains 100% S-Fund.   Many subscribers will read that and stop there, and that is cool.  For those who desire some additional opinion-based analysis, continue reading.

On June 12, the SP 500 index closed down, on increased volume, which is something not desired, then recovered (somewhat) on Friday June 13 and Monday June 16.  The June 12 action was a direct result of the issues in Iraq, in which terrorists/insurgents associated to the ISIS Group took over key Iraq cities and executed hundreds if not thousands.   Also, Ukraine/Russia is still hot, in light of numerous Russian President Putin (does anybody really believe this ex-KGB guy) statements that he is withdrawing from the region and/or is seeking peaceful options.   Pro-Russian rebels just shot down an unarmed, Ukrainian IL-76 cargo plane, while it was inside Ukrainian airspace and territory.   I suppose “in war”, anything can be targeted, but an unarmed cargo plane, legally and rightfully in position in their own country, just got blasted out of the sky, and at least in my opinion, it seems things are escalating, versus not, in Ukraine.

Most everyone has Fox News / CNN / etc., so I will not regurgitate what is already reported.    I have posted on this site numerous posts in testimony to the market’s desire for stability (no matter what the topic:  war, jobs, earnings) and the market’s desire for “knowns” versus “unknowns.”  The markets, ultimately driven by people (traders, investors, etc.), are extremely sensitive to instability and unknowns.

When (sadly) thousands of US-trained/US-invested troops/forces in Iraq basically give up positions and flee hostile, invading forces (ISIL), this obviously was not received well by the markets.  Iraq, an OPEC member, is a huge producer of crude oil and since the US-pull out, is a sensitive region and potential “breeding ground” for bad guys.  

In classic “we may go to war” action, Crude Oil has jumped, Gold has jumped, and stocks have gone down.   NOTE:   Historically, in almost every case, once military action occurs or some sort of political/diplomatic solution is successfully implemented, the markets rally.   See my prior posts on this topic, some of which are at:

http://www.thefedtrader.com/april-4-2013-update-precautionary-move-to-g-fund-is-war-good-for-the-markets/

http://www.thefedtrader.com/aug-27-update-war-markets-action-look/

Lets take a look at a chart of the SP-500 Index:

As can be seen above, the index has somewhat found stability and attempted to resume its uptrend.

Charts of Crude Oil and Gold are below, with comments on the charts themselves.   I prefer this as FYI only, we can’t trade Crude Oil or Gold in the TSP.  

It should be noted that while all the indexes have gone lower, the best performer remains the S-Fund.   The I-Fund (not surprisingly) has taken the worst hit over the last few days.  

In other news, the International Monetary Fund (IMF) has reduced its “growth forecast” of the US Economy, in this article.  While this is not necessarily good news, it may serve as ammunition for the anti-interest rate hike crowd and possibly suppress any rate hike date-acceleration (moving the planned date to a sooner date) that may be planned by FOMC.   Or maybe not.    Depending on how US elections go and the mood of our politicians, in light of other issues we are dealing with, how much we listen to IMF, headed by a French lawyer, is to be seen.

In summary, we are currently in some “Exciting Times” right now.   My TSP Allocation remains 100% S-Fund.   Any changes to this or other significant news, I will post it to this site.

Thanks for reading and please share this site with your friends and co-workers.

– Bill Pritchard

Howdy Folks

Today the jobs report was released and the markets responded very well, closing up, considering the report as very positive, and also giving us an indication that the planned upcoming rate increases will not be accelerated, as unemployment remained steady at 6.3%.

I am now comfortable with returning to stock funds, and will be going 100% S-Fund at the present time.    The small cap stocks responded strongest to the jobs report, and it stands to reason that this category stay strong.  Also, over the last two weeks, the small caps stocks have outperformed other categories.

I have no cool charts to post this time around, but the most important thing is that I am returning to the S-Fund.

Former PIMCO CEO Mohamed El-Erian provided his view of the jobs report, which I believe is worth watching.   Video courtesy of Bloomberg.

Thanks for reading and if you find this free site informative, beneficial, or maybe just entertaining, please share it with your friends and co-workers.

Everybody have a great weekend !

– Bill Pritchard

Hello folks

Today June 5, 2014, was the first day that the indexes flashed the upward “oompth” and thrust that I had been waiting for.

Tomorrow, June 6, is the release of the “jobs report”….jobs are very important for economic stability, home purchasing, consumer spending, and is an indicator of how our economy is doing.   Ideally, the markets respond positively.

I am not taking any action until we clear the jobs report.   Some of my loyal readers have reminded me that the indexes have hit new highs and why are we in G-Fund.   Yes, correct, and many of the readers are really developing an eye for things.   However without volume to support new highs, things can collapse suddenly.

Today, we saw much improved volumes on the indexes, with upward price action.  That is finally what we have needed to see.   The prior weeks of hum-drum, lackluster, price drifting upward (movement which indeed triggered “new highs” but more things needed to be considered), on low volume, witnessed a clear behavior change today.

The past two weeks have seen the small cap stocks (S-Fund) outperform other stocks, so that will likely be the place to move, pending tomorrow’s market action.

Thanks for the great emails and me personally, (yes a little risk averse), I am waiting until the market digests the jobs report.   A “good report” can go both ways, the market may digest this as good news, that the economy is doing well, however the market may say “hey, rate increases are that much more of a reality, and they may occur sooner” and the markets go down.   So as we have seen in the past, “good news” can cause many market reactions.

Our job is not to crystal-ball things, but REACT to the trends and market behavior.

I am 100% G-Fund, hopefully not much longer.

Thanks for reading !

– Bill Pritchard