Hello Everyone
This update will be rather short, however I am happy to report that the markets appear to be recovering. On Feb-12, the SP 500 Index “broke thru” the overhead resistance area located at 2080. As most know, the index has been range-bound 1970 to 2080 since January 1. The next overhead resistance is at 2093, which is the All Time High achieved in December 2014. However I have shifted my outlook from “worried” to “optimistic” as of now due to this recent penetration of 2080. We are “off the lows” (see charts below) in the 1980-1970 area, which is positive.
Some back-drop news likely accounting for these moves is the reported cease-fire reached in Ukraine (note “we have seen this before” however) and some speculation that Greece and Germany, the country with the biggest exposure to the Greek bailout package, may be reaching some sort of agreement. I have reported previously on this site regarding the Greek situation, I will not re-hash that reporting, however per internet news sources, the “drop dead date” for the newly elected Greek government to have some sort of resolution to their bailout program is February 28. So between today and February 28, we may still see volatility in the markets.
Note: There is some argument for a possible move to I-Fund, IF the Greek situation is resolved, and IF the Ukraine cease fire appears to hold. If stability returns to the international picture, the I-Fund may begin to “take the lead” over other funds. This is merely speculation on my part and by no means would I try to “get ahead” of the possible I-Fund recovery by investing in it today. I would not make that move yet. Lets monitor things a little longer.
My preliminary analysis shows that the C-Fund is leading this past week, then S-Fund, then I-Fund. It is very difficult to pick out “the winner” when all contenders have been range-bound and volatile. This is akin to three swimmers in a swimming pool with choppy waves, floating in circles, on their backs. “Show me the fastest swimmer”. Very hard to determine that under those circumstances. However, on a preliminary basis, C-Fund is leading. I remain 100% S-Fund presently until we get a little more insight into the market’s direction.
Note, as discussed on this site previously, when large cap stocks (C-Fund) consistently lead all other stocks, this is reflective of a mature “long in the tooth” bull market, a market which may be reaching the end of the bull cycle.
Here are some charts, first with no comments, then one with comments:
Note that Monday February 16 is a Federal Holiday and the stock markets will be closed. Friday February 13 trading volumes may be light in the markets due to the long weekend.
I remain 100% S-Fund at the present time. Lets monitor things; ideally the SP 500 remains above 2080, if it drops back below that, the strength we saw today may be short lived.
Thanks for reading, talk to you soon….
– Bill Pritchard
