Good Evening
I will keep this update brief, as I am TDY on the road, so no cool charts this post. It is also almost midnight and just got out of my “simulator training” which means torture for 4 hours in the flight simulator, testing the pilot’s ability to deal with engine fires, ice covered runways, blown tires, and other things. Prior to that was 4 hours of “ground school” consisting of questions and answers and refresher on aircraft systems and procedures. So my brain currently is not fully operational.
Long story short, the markets continue to display weakness (since August 7, I have spoken regarding the market’s apparent weakness and lack of volume) and the markets have not celebrated the recent Federal Reserve Chief Janet Yellen’s comments regarding the economy. The media was speaking highly of the “good news” associated to this meeting, one news of which is no apparent acceleration of the date of the looming Summer/Fall 2015 interest rate hike. The markets did not “jump for joy” over this, and were up, I believe 40 to 50 points on the Dow for the day. I knew something was wrong as soon as I witnessed this lackluster response.
Recent sessions have seen above average volume and selling, aka “distribution.” As stated here, multiple days of distribution, typically four to seven, within four to six trading weeks, tends to stop existing uptrends and reverse them into downtrends. The Distribution Day count is five for the NASDAQ and three for the SP 500 since Sept-3 and a few “almost distribution” days on both indexes.
The Russell 2000 Index, depending on what metric you use, is arguably already in “bear market” mode. This index tracks small cap stocks and behaves very similar to the TSP S-Fund.
Observers will query me, “But we have made new highs”. Well, yes, made them, only to reverse down every time we “make a new high.” This is not the action associated to a healthy, energetic, uptrend. The 4540 NASDAQ and 1983 SP 500 levels have been violated, these were discussed in my last post.
I will post updates as needed over the next week or so. My stated belief that G-Fund is safest is still intact. To emphasize, my personal opinion is that the markets are displaying weakness and their behavior is a possible prelude to a new Bear Market/downtrend, potentially damaging to TSP account holders exposed in stock funds. This is my personal opinion. Sometimes you gotta be strong when skeptics exists….I am sticking to my guns (no pun intended….) and stand by that position. Observe that I am more concerned with loss protection than gain realization, as gains (the “scoreboard”) will take care of themselves. Catastrophic losses however, are something difficult to recover from.
Thanks everyone…..talk to you soon
– Bill Pritchard
