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Good Morning

I typically do not post morning updates, however somewhat unanticipated news out of China has caused global markets to “sell off” overnight, resulting in Dow Jones Futures (trade 24 hours) to be trading down 150+ points as of 7:45 AM Central Time on today.   The US stock markets will open in approx 30 minutes from this post, or 8:30 AM Central Time.   See chart below:

This chart is available at this link, which will of course change its content during the trading day:

http://www.cmegroup.com/trading/equity-index/us-index/e-mini-dow.html

While I try not to crystal-ball the “why” or the “what will it do tomorrow” questions, and instead prefer to react to the market itself, I will state that the financial news sites are all pointing the finger towards China for this sell-off.   Apparently China is tightening up their own lending and monetary policies at their banks, and as we know, when lending is reduced or restricted, this can affect growth and future business activity.   The Shanghai Index is reportedly suffering its greatest one-day sell off in five years as we speak.    Concerns over slowing Chinese GDP growth, along with some speculation that China’s recent prior growth is a carbon copy of the easy-mortgage/lending-fueled boom of USA, (which crashed hard in 2007 to 2009), resulting in Chinese lenders trying to avoid a similar USA situation.   Expect numerous opinions and speculation to explain China’s problems in today’s financial media.   Expect statements that the world is ending (and statements that the world is just beginning), another reason it is important to react to the market itself and not the confusing signals that exist in the media.  China being China, one can never be 100 percent certain that their data and reporting is fully accurate, FYI.

We also know that markets tend to over react to things, so a one day event of a down day is by itself, nothing to overly be concerned with, BUT we do need to monitor things over the next few days/weeks.   Note that December is typically a very good month, historically, for the US markets.

I would not be surprised to see International stocks / I-Fund get hit pretty hard today, I have expressed my opinion numerous times on this site as to why I am not in the I-Fund and its increased risk, in light of the “current climate” the world is in right now (war, global economic issues, etc).   Actually that was stated far too pleasantly.   I expect International stocks, especially those with Asia exposure, to be creamed today.  Again, those are my opinions.

I am happy that this is happening on a Tuesday morning, as this allows the markets to assess things and possibly bounce back at the end of the week.   Typically if this happened on a Thursday or Friday, the markets would sell off even harder as folks don’t want to be “holding anything” over the weekend, and a minor panic attack on a Thursday or Friday can result in a huge over reaction and sell off.   I am optimistic we don’t see that happen.

I am currently 100% S-Fund.

Thank You

– Bill Pritchard

Hello Folks

Well this month has been somewhat quiet as far as updates are concerned, however “no news is good news” and there is nothing really negative to report this month.   My choice to re-enter S-Fund on November 2 has been very rewarding, as the markets continue to climb upward, with the SP 500 Index making a new 52 week high of 2074.21 on November 25.

The top performing fund remains S-Fund, based on my analysis, with C-Fund close behind.   My personal TSP Allocation remains 100% S-Fund however 50%/50% C-Fund and S-Fund would be fine also. 

Lets take a look at some charts, without comments, then with comments:

As can be seen on the charts, the SP 500 and NASDAQ indexes “found a bottom” in mid-October then began an uptrend.   Initial volume after mid-October was very strong, then volume dried up somewhat.   With that said, the number of above-average volume “up days” is twice the amount of “down days”, Six up days versus three down days on the NASDAQ.   This placates my concerns over low volume, however I do wish for higher volumes as volume is what sustains trends.  To keep a rocket going, it needs thrust and horsepower to drive it upward, and that is the role of volume in the markets.   The same rocket can run out of fuel and fall to earth all by itself.   The same thing occurs in the markets.   Volume is not needed to drive a market downward, but it is needed to keep it going up.  In my typical fashion I over articulated what I could have said in simple terms, so in summary, I would like to see more volume.

While we are on the topic of volume, this week (Nov 24-Nov 28) will be a reduced volume week, as many market participants are sitting out due to the Thanksgiving holiday on November 27, a date in which the markets are closed.  So don’t expect to see huge volumes in the indexes nor in individual stocks. 

It should be noted that historically November, December, and January are the best performing months out of the calendar year, with December being the best month of all.   So if history repeats itself (as it usually does…), those in the stock funds should do well over the next few months.   Observe that the behavior of the markets in January almost always “sets the tone”for the rest of the year, so we should keep an eye on January.    I think this year will close out really well, we have had plenty of good economic news, oil prices are at 4 year lows, and the mood in American is generally positive.  

This site is about the TSP plan, and not stock picking (plenty of sites out there for that), however due to constant arm twisting I am going to touch very generally on some stocks I either have now or am “looking at”.    Recall that I primarily am a technical investor (charts) BUT need a “story” to back up the chart.   These are NOT investment recommendations.   These could all roll over and go to zero (0) tomorrow.

AAPL:  I think this company has a great future and the top selling “cell phone cases” on Amazon is IPhone 6, IPhone 6, and IPhone 6.    Take a guess how well the IPhone 6 is selling…

GPRO:   While the stock is volatile, GoPro cameras are a very “hot” item and I think the future is bright.

AAL:  The largest airline in the world, post-merger with US Airways, will likely dominate all others, especially as business travel (the economy) continues to rebound.   If it can get thru some hiccups associated to the merger and different labor groups, I see AAL with blue skies ahead.

In the “other news” category, and since the majority of my audience is “6(c)” community (if you have to ask, you aren’t in that community), I wanted to share some news out of Austin, Texas.    You may recall prior discussion on this site regarding the San Angelo City Park project, regarding Austin Police Officer Jaime Padron, who was killed on duty in 2012.   Jaime was a fellow college alumni of mine, also a close friend, and I along with others, worked to get the aforementioned park, now called Jaime Padron Memorial Park, built and finished.   Jaime was a USMC veteran and graduate of Angelo State University.

Flash forward to November 9, 2014, which was the dedication ceremony for Jaime Padron Elementary School, in Austin, Texas.   This new school is Austin ISD’s largest elementary school and is staffed by some really great teachers and folks.   I was honored to be invited to speak at this dedication, to a very large crowd, consisting of students, teachers, community leaders, area law enforcement, Austin ISD Superintendent Dr. Paul Cruz and Austin Police Chief Art Acevedo.

It is important that our fallen officers never be forgotten, and equally important that we appreciate and recognize the challenges and dangers law enforcement face every day.   My speech at the dedication was entirely dedicated to that very topic.   Here are some pics from the event:

Standing next to Jaime’s brother Johnny (black jacket) along with law enforcement friends and Austin Chief Art Acevedo

Chief Acevedo speaking to audience.  I have not met anyone who can speak with such ease and ability as Chief Acevedo.

Speaking regarding the meaning of the word “hero”

Participants in construction, completed in 2014

We must not forget why we do what we do

That’s it for this update.   To repeat, I remain 100% S-Fund and I see no red flags ahead.    

Happy Thanksgiving to everyone and talk to you soon

– Bill Pritchard

Good Evening Folks

A review of the previous two weeks action was conducted over the weekend, with special attention on last week.  Long story short, I am changing my TSP Allocation to 100% S-Fund.

Bottom line, is volumes have indeed returned to the point where I am  confident to return to stocks.   In addition, because of the price action last week, we have three “Gap Up” days in the NASDAQ index, which means the next day’s low price was physically above the prior day’s high price, causing a “gap” to appear on the chart.  Gap’s, whether in an uptrend or downtrend, are typically a reliable signal in respect to the particular direction the index is already going.   Gaps are more common in stand alone stocks, such as AAPL (Apple).   AAPL may report great earnings, and because everyone jumps into AAPL the next day, the stock “gaps up.”   On an index, which represents ALL the stocks, it is harder to obtain a gap up.   The NASDAQ displayed three (3) Gap Up Days since October 20, until present, which is only ten or so trading days worth of time.  In addition, the NASDAQ has made an All Time High, another bullish (good) signal.

Small cap stocks (S-Fund) are outperforming all other stocks, to include large caps and international.   Small cap stocks almost always are NASDAQ stocks, which also happens to be the best performing index at the present time, versus SP 500 and Dow Jones Index.  There is no indication that small-cap stocks will suddenly stop their current performance, however we must monitor things (as always) and be flexible.

It is not known how long this uptrend will last however historically the worst months of the year, August, September, October, are now confirmed behind us.  This historical fact, combined with documented questionable behavior by the markets, all discussed in past posts here, was largely the decisional factor in my prior since-August G-Fund position.  However November, December, and January, are the best months of the calendar, and here we are, November.  The very first November trading day is Monday Nov-3. 

I may post an more in-depth update later this week, however again, I am 100% S-Fund as of November 2, 2014 (date of TSP Allocation change request into TSP site).

Thank You everyone

– Bill Pritchard

Good Evening Folks

Been out TDY so wasn’t able to update until tonight.   No cool charts but long story short I want this week to come to a close before making any decisions on leaving G-Fund, where I am now.   As many know, the markets sold off and crashed pretty hard a few weeks ago.   Soon after that, likely (however I own no crystal ball…) “bargain hunters” stepped into the game and bought “cheap” stocks and thus pushed the indexes back up.  We had some decent high volume days, with a close price higher than the open price, indicating accumulation.   There is a difference between a “bargain hunter” who is a large fund or institutional investor buying “bargains” (cheap stocks, TSLA was $250, now it is $220, a “bargain”) and the investor who is basically voting on the economy via huge buying power and vacuuming up everything in sight because he thinks in 1, 2, 3, years, the economy is going to be booming and therefore his investment will pay off.   My opinion is the latter example sold-off in early October, and the bargain hunter came in last week and did some buying, bringing his metal detector to the beach and picking up hidden coins and gems amongst the sand.   I don’t think the bargain hunter group can overpower the earlier sell-off group but I have been wrong before…

With that said, recent volumes have started to dry up, and it is looking like the same behavior from August, when the index went up, but on low volume.

In addition, market reaction to today’s FOMC statement was muted at best, also what I call “less than enthusiastic.”  The statement discussed the end of QE (Quantitative Easing) which most feel has already been “priced into” the market, but I guess that is my point.  If indeed priced in, what triggered the recent sell-off in first week of October ?  It is not known (and only via watching the indexes) if enough buying power exists to truly reverse the bearish signals from a few weeks ago.    The markets could have said “ok, cool, that’s what we expected [QE Ending], no changes, lets rally today”, or could have said “wow, yes, it is confirmed, QE is over, the world is ending, time to go down” but they just didn’t do anything.   I am intrigued by this reaction (or lack of reaction).

In my opinion the bulls (believe the market will go up) will wrestle with the bears (believe market will go down) for a few weeks and THEN a solid direction up or down will be determined.   Also note my “mid-November” hypothesis posted prior to today.

I think that while this wrestling match is underway, we need to stay out of the ring.  I remain 100% G-Fund (yes, possibly overly conservative, but remember, none of my subscribers who were in G-Fund lost any money August-Present).

Lets allow the the week to close out and take another look at it.   Remember a past example of dying dogs and one last strong kick:    A strong up day (or two) does not mean we immediately dive back into the sometimes dangerous stock market waters.    I prefer to see an overall behavior change and sentiment shift before I take action.   The neighborhood bully who is on his best behavior for two days at Grandma’s does not then make him an angel.

Enough goofy examples….you get the idea….

Happy Halloween and talk to everyone soon…

– Bill Pritchard

Today October 21, all indexes rallied strongly, in one of the strongest one-day performances I have ever personally seen in many years of trading.  NOTE:   Some of this “rally” was largely due to one stock, Apple (AAPL), which is NASDAQ’s largest stock, and is found as a holding in just about every mutual fund known to man.   The positive mood surrounding Apple trickled into other NASDAQ stocks, thus lifting the index, which is largely tech-company weighted.  While AAPL was the main reason the markets went up, I will take rays of sunshine whenever they shine.  Airline stocks also rebounded strongly, as the 21-day incubation period of Ebola has passed and nobody else is apparently infected, and the world (for now) is not ending.  The ISIS news also seems to have subsided, either due to reduced reporting and/or reduced ISIS activity.   Due note that my opinion is the planned interest rate hikes for summer/fall 2015 have not changed, and this may throw some logs into the path of the market as we approach that time frame.   However, if we can grab some gains for a few months before then, that would be great.  

My desire is to let the week finish out before making new allocation decisions, however those who have been in G-Fund since August (like me), have a full bag of cash, undamaged from recent turmoil, to use in the event we jump back into stock funds.  The last few weeks have witnessed multiple, damaging, triple digit down days, and one-day’s performance will not necessarily change the direction of the ocean liner called the stock market, so let’s see how the week plays out- but the markets may be turning upward.   I don’t base decisions on one day alone, but make no doubt about it, today was indeed a great day.

Standby to standby for a weekend update.

I remain 100% G-Fund for now.

Thanks everyone – talk to you soon !

– Bill Pritchard

Good Morning

In my second AM update in two days, required due to the recent market turmoil, the Dow Jones futures are trading 100+ points (125-150, variable) lower this morning.  See image:

http://www.cmegroup.com/trading/equity-index/us-index/e-mini-dow.html

What this means is basically we have another rough day in store for us in the regular stock markets, today October 16.  Note that I made the same assessment, yesterday 10-15, pre-market, and this assessment was proven correct with the Dow Jones dropping at one point 350+ points.

To reiterate earlier statements, I remain in G-Fund, and have been in G-Fund since August, due to my observations and signals of market weakness.   This signals have clearly proven correct as all of 2014’s gains are wiped clean, gone, in recent days.   The other site’s claims of “we performed great in 2014” can be ignored, and sadly the “other sites” have done nothing, zero, to protect your current balance from damage.  Most other TSP sites are currently frozen in gridlock, gripped by panic due to the recent turmoil.   The world is great until it is not great.   Meanwhile, this site seeks to get folks “off the X.”  This is the difference between this site and other sites, who are chasing gains and pat themselves on the back when their broken clocks happen to have the correct time twice a day.

Those in G-Fund have seen no damage to their accounts, and remain safe from this violent and damaging storm. 

I remain 100% G-Fund.   Thanks everybody and have a good day !

– Bill Pritchard

Good Morning

As I head out the door, I took a look at the Dow Jones futures market, which trades overnight.  Dow Jones futures are down 130 points.   Current time is approx 7:55 AM Central, the regular stock markets open in 35 minutes.

Futures almost always reflect the “mood” of traders going into the regular stock markets, so today may be a rough day.

Keep those seatbelts on…

– Bill Pritchard

Good Evening Folks

Well, today it is October 13, and maybe that is a bad number to start the week on, as the Dow Jones is down over 200 points.   Today, as most of us are aware, is a Federal holiday, however the markets were open, a sort of oddity but these things happen nonetheless.   Historically, Columbus day is a quiet day in the markets, as most schools are closed and it indeed is a national holiday.  Indeed, in past years, Columbus Day has witnessed reduced action due to traders and Wall Street participants on a three-day weekend.

Except for today’s Columbus day.   SP 500 and NASDAQ volume was huge, with severe losses on all indexes.   As stated, the Dow was down over 200 points.   The SP 500 is my “go to index” but I make mention of the Dow because every financial news site is in love with that index, so I will make reference to it here also.   The SP 500 Exchange Traded Fund (ETF), ticker symbol SPY, which trades like a stock and is designed to “mirror” the SP 500 index, traded lower on double its average trading volume.   A very important level, 1900, on the SP 500, was violently penetrated to the downside, today.

Lets look at some charts:

As can be seen via these charts, with comments on the charts, the Bearish action continues.  Important to note is that the index is now below its prior lows in the 1900 area, an area in which I went to G-Fund in early August, only to have the index (at that time) suspiciously reverse course upward.  I kind of beat myself up (and took a rubbing) on that “call” but I remained firm, as my system was indicating weakness ahead.  Many approached me one-on-one and asked my opinion, my reply was that I was remaining in G-Fund as I was skeptical of the that uptrend, which lasted most of August but on very low volume (apparent on above charts).  A few elected to be lone rangers and “do their own thing” (Type A personalities, gotta love our colleagues, bless their hearts) while others decided to remain in G-Fund.

Comment:  Remember my prior post about “8 weeks” from market peak and early warning signs, to when the real damage starts to occur?  My prior post stated “mid November” as the most recent market peak (8 weeks prior) was “mid September.”   BUT if we go back further, before mid-Sept, the market peaked in late July, approx July 25.   It then broke down and I went to G-Fund.   Using the market peak of July 25, lets add 8 weeks to that, that gives us Oct 25.   So my point (rambling…) is things may actually be falling apart now, versus mid-November.   That is kind of in the crystal-ball category but it is something to mention.

I continue to remain 100% G-Fund.   

Thanks for reading and lets see how this week plays out.  Please share, tell, demand, order your colleagues to sign up for email updates to this site, if you feel they would benefit.    Thanks !

– Bill Pritchard

Well, when I stated back on August 7 that I observed “cracks”  in the markets and market weakness ahead, and made my move to G-Fund (and advising my subscriber base), who would have thought that 8 weeks later the markets would have taken such negative hits like this week.   I made multiple, repeated, posts, since August 7, reaffirming my concerns of market weakness and desire to remain in the G-Fund, and this week is the perfect example of its role as a “safety cover and concealment” tool.   Some readers “grew bored” in G-Fund and returned to stock funds, which, I can understand, but those who remained in G-Fund have seen zero, none, no damage to their accounts.

Bloomberg News is reporting that the SP 500 index has had its worse week in 2 years, and the Dow Jones Index has erased all 2014 gains.  Just, wow.

Watching this from the G-Fund is like watching a train wreck.  Far enough so you don’t get hit by flying debris but close enough to see and hear the crash.   Sadly, I don’t think the train wreck is even fully going yet.  My crystal-ball (never really has ever worked, but…) is telling me “Mid-November” may be the start of the real pain.

The “other sites” (you know, the ones with no apparent owner, just some mysterious people who type stuff, or whose physical address is a Mail Boxes Etc. store) continue to advocate stock allocations instead of the G-Fund.   Good Luck with that.   Remember, I look at things mostly from a price/volume and “behavior” perspective, not one day this, one day that.   I look at the overall “animal” called the market and make my decisions that way.   Don’t be swayed by one day “up days.”   We had “the strongest day in 2014” on Oct 8. 

That didn’t last long.  A dying dog can give one more hard kick before the lights go out.

I remain 100% G-Fund…I try not to reach out and catch falling knives.   The Fed Trader has been the only site to discuss the importance of G-Fund, as early as August 7, remaining safe in the G-Fund since that date. 

Everybody have a good weekend, and if anyone (and their TSP balance) could benefit from the discussion and commentary on this site, please share it with them. 

Thanks !    Take care

– Bill Pritchard

Hello Everybody

On 10-07 the Dow Jones got slammed with a 272 point loss by end of day.  This is not the signal of a pending new upturn.  Lets take a look at some charts:

As stated, the Dow Jones Index went down 272 points.   This is a very significant amount and associated to institutional investors “fleeing” the markets.  The various financial news websites are discussing Europe fears, etc. stuff, but as you know, on this free site, since August 7, I have discussed my own concerns of market weakness.   Eight short weeks later, October 7, and the wheels are starting to come off  the market’s axle, as the bus apparently rolls downhill with no brakes and no concern for the destruction it leaves behind.   Unless, of course, you are in G-Fund, which is where I am now. It should be noted that all TSP Stock funds had negative returns in September, a month that I was in G-Fund for the entire time, as were many Fed Trader followers.

It should be additionally noted that last week, Thursday 10-02, and Friday 10-03, the markets went up, on decent volume, and some “experts” in the financial press could be found celebrating how the prior down days (before 10-02) were “temporary blips” and the “market is going into the weekend on an upbeat note.”   Some sites celebrated the “positive jobs report”, ignorant of the fact that the positive jobs report only added another layer of cement onto the sealed deal called guaranteed interest rate hikes in 2015.  

The 1965 level which I discussed on this site on Sept 30, was barely touched and no significant penetration on 10-02 nor 10-03, so I immediately knew those days’ action were just a feeble attempt by the market to make some final gasps.  

It is valuable to note that in prior Bear Markets, the major flash fire really only got going until 8 weeks after the recent market peak of the prior Bull.   Some smoke and a few sparks here and there, but the major crash did not start for 8 weeks or so (approx).   Our peaks in the NASDAQ and SP500 have been basically “mid September” so using this general guideline, it is possible that “mid November” we see a major downward slide.  Possible.   This may be a little earlier or a little later.   But if my beliefs are correct that a new Bear is in the works, then my opinion is “mid November” is something to monitor. 

None of the above, or information from my prior posts, has been put forth by similar TSP websites, easily found via Google, of which many exist.  Nobody is talking about increased volume and distribution, or support levels on the SP 500.   That level commentary is available at the The Fed Trader, but nowhere else.   If you want cut and pasted news articles and regurgitated “buy and hold” mantra, it is readily available, trust me.   If you want tactical decision making and the reasons behind it, only one place has it, The Fed Trader.   A cursory glance at “the other sites” show many absurd recommendations, such as S-Fund, partial L-Fund and C-Fund, and other stuff.   Folks, the Dow Jones (over the last few weeks) has taken 200 point, 250 point, 272 point blows.  That is not a “we think the market will do this” or “it is likely that” kind of stuff.   Those triple digit losses have happened.   They occurred.  Period, the end.   Also,  we have a fundamental/economic back-drop of pending interest rate hikes, European economic concerns, military action against ISIS (which will cost money and impact the federal budget), mid-term elections, and other things in-play.    Let the numbers talk.   Fed Trader readers in the G-Fund in September, lost no money to their account balances.   Other website readers, lost money.  S-Fund was down 5% in September.   That means a $500,000 TSP non-Fed Trader subscriber saw $25,000 evaporate in September.   

I remain 100% G-Fund.   Please continue to share this free site with your friends and colleagues.  I sign my name after every post and my picture is posted in the event someone wants to throw darts at it.   I encourage folks to find a similar site which does the same and has the same transparency.  

I hope everyone has a great week. 

– Bill Pritchard