Monthly Archives: December 2015

Guys, I want to wish everyone a HAPPY NEW YEAR.   Lets all be safe and make good decisions as we celebrate the closure of the year and the beginning of the New Year.   I would like to post some final market comments before we all go off the grid for the next couple of days.

2015 was a challenging and difficult year, for all.  You and I, are not alone in our frustrations.   It is not just me, a TSP participant and “non Wall Streeter” who had struggles, finally going to G-Fund back in August.  Bloomberg Business had a segment regarding 2015’s market struggles, please take a look:

With that said, lets take a quick flash-back to my first post of 2015, dated January 7, 2015.  In that post, I commented:

“….The first trading day of January is symbolic as it tends to “set the tone” for things to come.    Then on Monday, January 5, arguably the first trading day “operationally speaking”, due to the New Year’s weekend now past, witnessed the Dow Jones closing down 330 points.  Then Tuesday, January 6, the Dow Jones closed down 130 points.

While I am the first guy in a crowd to try to look for the positive when surrounded by bad news, I admit there just isn’t anything positive so far this new year from a market standpoint….”

Flash back to today, December 31, 2015, and we have the Dow Jones Index (the same index discussed in my January 7, 2014 post) has had its first annual loss since 2008.

Today the Dow traded lower by 178 points.  While volumes during the holidays are indeed light, I would have sure preferred a flat close or a close of just a few points positive versus losing 178 points on the last trading day of the year.  The Dow Jones is joined in poor 2015 performance by the SP 500 index, also going negative for the year.  In fairness, many Dow Components are also components of the SP 500, but the bigger point is that these indexes represent (in theory) the largest, most financially stable companies that trade on the stock exchanges.  The NASDAQ is positive for the year, but note that some of the larger NASDAQ components aka Apple, NetFlix, and Amazon, on their own, had great individual performances, thus giving some updraft to the overall index.

Note that historically the year before a Presidential election year (that means now, 2015) is typically bullish, or up.   This year it was not.  See Table:

It is obvious that 2015 is not up 10%, not anywhere close, we are negative for the year (aside from some NASDAQ stocks).

The positive to all this is that a Presidential Election, no matter what party or candidate, typically will kick a Bull Market off as it is a “catalyst” event.  So lets keep our fingers crossed on that.   Besides an election, 2016 is expected to see multiple additional interest rate hikes.

At this point, my TSP balance is safely tucked into bed, resting under the warm blanket called the G-Fund.   Interesting to note is that the G-Fund was the only positive fund in December, per the home page on GovExec website.  The official TSP home page does not show December returns yet, however per GovExec, the worst performing (non-Lifecycle) December funds were the S-Fund and I-Fund.  While some may snicker at my admitted conservative approach, positive returns are always better than negative returns.   There is no economic theory, business school analysis, or magic investing formula, that will refute that.   None.

I remain 100% G-Fund.   Happy New Year to all and lets make 2016 another great year for subscriber growth.   If my site has caused piqued interest in your own TSP performance, triggered an elevated interest in the stock markets, or caused a heightened monitoring of your finances, that is great.   If someone else, a colleague or coworker, would benefit in a similar manner, please share my site with them and encourage them to subscribe.   This (free) site is run by a real human (me), a fellow TSP participant with “skin in the game.”   Some of the “other sites” have difficult to identify ownership (who is this dude), unknown bigger intentions (are they trying to sell me something?), and other practices.

Thank you for a great year in subscriber growth and see you in 2016.

Happy New Year everyone

-Bill Pritchard

I wanted to wish all the readers and subscribers a MERRY CHRISTMAS and a Happy New Year.

Also, market action remains volatile and volumes are much reduced due to the holiday time period.   With that said, don’t over analyze things until the market action gets back into full swing, which will likely be on Jan-4.

In what has become an often repeated statement every year, my subscriber growth remains very impressive.  Thank you for the emails and positive support, this site has clearly filled a void that existed.  God Bless your friends, families, and this great country called the United States of America.  MERRY CHRISTMAS.

– Bill Pritchard

Hello Folks

Mere days after my Dec-9 post, regarding deteriorating market conditions, a severe sell off was observed in all the indexes, with the Dow Jones Index shedding 300+ points on Friday Dec-11.

Some may recall that I went 100% G-Fund in August (I remain 100% G-Fund at the present time), and may remember my remarks in my August 23, 2015 post that

it takes months, not mere days, for a bear market to fully materialize

I remain committed to this statement, and flash forward almost four months later, we can see that the attempted rally from early October until early November, has grown weak.   In numerous prior posts, I made reference to the importance of the 2120 level on the SP 500.  This level is recognized by me to be a required trigger, prior to moving money out of the G-Fund.   We can see that 2120 never happened, and by all appearances, will not be happening anytime soon.  As a matter of act, the 2020 level, an important support level, was breached on Friday.   See charts:

This was done on high volume, which means Friday was yet another Distribution Day.   As oft-discussed before, numerous distribution days within a few weeks, in almost all cases, will kill the rally and typically send the trend into Bear market territory.

One causal factor, in addition to the looming interest rate hikes and Chinese economic concerns, is the dropping price of oil.  In my opinion, buying oil investments right now would be akin to trying to catch a falling knife with your bare hands.   Lets look at some charts:

As can be seen, Crude Oil is trading at $35 a barrel.  One advantage that I have, being from West Texas, is access to folks who actually work and pay their mortgage via the oil industry, unlike traders in New York or Chicago watching a computer screen on Wall Street, who probably think a lowboy is a small child, a bobcat is a wild animal, tripping is when you step on your untied shoelace, and mud is what happens to your garden when it rains.   I had one such industry professional at my house for dinner last weekend, who confessed that he was “concerned” about things in the oil industry.   Prices per barrel, need to be $55, for the oil companies to make a profit and yet not result in super expensive gasoline prices for the consumer.  This person felt that prices could continue lower, into the “sub-30’s” for price per barrel.    We are at $35 now.

Regarding interest rate hikes, the FOMC meets this week, on Wednesday Dec-16, will announce their action regarding interest rate hikes.   So let’s keep an eye out for that event.  That is a pretty big deal- in my opinion, timing could not be worse, this meeting will occur just before a major holiday break by Wall Street traders and money managers.  If rates are raised, these folks are going to dump shares, not “hold onto them and monitor things.”   They are going to hit the sell button with both hands, and be “out” of positions so that they can enjoy the holidays worry free.

Again, I remain 100% G-Fund.   I hope everyone has a productive and safe week…talk to you soon.

-Bill Pritchard

Hello Folks

I am disappointed to report that the market’s action this week have reflecting additional selling, aka “distribution”, in the indexes, with the “Distribution Day” count now at eight, on the SP 500.  As discussed in my October 14, 2015 post, Five or more days within 20 days can typically send the markets into a new downtrend.  Again, we have had eight.   I am further concerned that these distribution days were on rising volume.  Note that the recent “Dow up triple digit” days, which many high-fived themselves over, happened on low volume, and without volume to fuel the flames, the fire will go out soon thereafter.

The flames are looking dim, at least this week.   Lets look at some charts:

As can be seen above, my oft-mentioned 2120 level was never attained, and this was a very important trigger criteria as part of my decision to leave the G-Fund.  Well, 2120 never happened, and I remain 100% G-Fund.   2020 is the new level I am looking at, which represents a support level, which the SP 500 index touched in mid-November.   If the index breaks below this level, that is an additional negative signal and reflective of a pending Bear market.

What is causing this action ?   Again, I hesitate to guess, and will not bury you in boring data, but 1) China and 2) US interest rates are the big reasons.   Data continues to stream out of China which indicates that their economy is slowing down.   China, with 1.4 billion people, is worthwhile to pay attention to.   Compared to the USA, with 320 million people, China is quadruple the population of USA.  Any recession or slow-down in China will impact other trading partners.

Regarding interest rates, the FOMC has finally started using phraseology to point towards a clear-cut action (whether it be raised, or do nothing, at least we have some clarity).   It appears (and I would not be surprised) that rates will be raised at the December 15-16 meeting.  If not, most likely in early 2016.  What is troubling about a rate-hike in December, is that this is just before the Christmas and New Year holidays, a time when most of Wall Street goes on vacation, not to return until after the New Year.   It could be argued that many money managers on Wall Street (if they are already not easing out of positions…) will hit the “sell” button, no questions asked, if rates are hiked, thus allowing them to go home during the holidays worry free.

Fellow trend follower and billion dollar+ hedge fund manager Stanley Druckenmiller, is also exiting positions, likely due to his own belief of an upcoming bear market.   Lets take a look at a video from Bloomberg News, which happens to be a pretty reliable source of financial news by the way:

Apparently I am not only person with a conservative stance.  With that said, lets monitor things and keep an eye on 2020 on the SP 500.  Volume is very important:  no volume, and the fire (either direction) will burn out.   High volume, in any direction, will light things hotter and sustain the flames into that direction.

I remain 100% G-Fund.   Thank you for reading and please mention this site, and forward these emails, to anyone who may benefit.   The only reason I have multi-thousand subscribers, is largely due to word of mouth and the fact that you find value in The Fed Trader website.  Again, thank you.

Talk to you soon….

-Bill Pritchard