Hello Everybody
Well, for the first time, in a long time, the indexes are showing some signs of life, and a desire to establish a new direction. Unfortunately volume is “not there yet” but it indeed is trying. This action was fueled by two things, a slight rise in Crude Oil prices, now at $33 per barrel, off its prior lows of sub-$30. This rise was fueled (no pun intended) by news that some OPEC nations will not increase production, and this resulted in a price increase. In my opinion this price rise is temporary, and we may see a return to $30 or sub-$30 in the near future. In addition, the January 26-27 FOMC Meeting minutes were released, the notes are reflective of an FOMC that is wary of raising interest rates. I personally believe (my opinion…) this could be called “FOMC in an election year”, however the language and phraseology will obviously reflect economic reasons, not political, for hitting pause on further rate hikes. Again, my opinion. I think (and many others do also…) that the time has come to resume slight interest rate hikes, as the economic data indeed is much improved since as recent as 12 months ago.
Lets take a look at some charts, first without notations, then one with notations. Observe we are concerned with the SP 500 Index, and need to keep an eye on the 1950 overhead resistance level, which is determined by me to be important. The most recent touching of this level was on Jan-13, in which the index hit 1950.33, and then again it came close, on Feb-01, reaching 1947.20.
As can be seen on the charts, for the last three trading sessions, the index has closed higher than the price day, on rising volume. However, as also can be seen, volume is still basically “average” and not the desired “clear and convincing power and strength” which would be witnessed with volume 25% or more above the average volume. Trading volume on Feb-17 was slightly above average. However in light of recent market turmoil, I desire much more powerful volume.
Note that a sudden reversal and positive climb thru 1950, does not automatically mean we have blue skies ahead. I am cautiously optimistic, if we get both, a penetration of 1950, on strong volume, that would be potential trigger to leave the G-Fund.
I remain 100% G-Fund. Thank you for reading and talk to you soon.
-Bill Pritchard
