The Fed Trader

Hello Everyone

Unfortunately 2015 is off to a poor start; my last post discussed the fact that the first trading day of 2015, Friday Jan 2, was sandwiched between Thursday Jan 1 (a holiday) and Saturday Jan 3 (market is closed).   Jan 2, not shockingly, saw very little market volume however nonetheless closed down.   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.   I would prefer flat or lethargic action versus  back to back down days, on above average volume.   See charts, first those with no comments, then with comments.   Note my primary analysis tool remains the SP 500 Index.

Long story short, my finger is on the trigger guard for a move to G-Fund.   Barring exigent circumstances or a compelling story in the background, I will likely go to G-Fund if the SP 500 penetrates below and closes below 1970 on the index.  I of course will update this site as needed.   Observe that the “market knows all” and at the end of the day, “price is all that matters.”   In other words, it doesn’t matter what theory or opinion exists as to why things are happening, what matters is what is happening.  For further insight into my belief system on this, take a look at my March 2013 post, titled Buy and Hold is Dead, which generated quite a bit of positive emails from readers.

With that said, it is often useful to have an understanding of the forces in play behind the market’s movement.   Just remember to respond to the market itself, and not news stories or talking head experts on cable news.  A few things to be aware of:

– Oil Prices at all time lows, currently $50 per barrel:   Some energy companies are starting to lay off workers due to reduced exploration activity in 2015.   Also, OPEC (by the way when you have some time, take a look at who the members of OPEC are and try to count how many are clearly US allies) appears to be displeased with our successful domestic oil exploration and appears to be playing the game of who can hold their breath longer.  In other words, our exploration has caused (in my opinion) supply to go up, and drive price down, displeasing OPEC, who now has decided to not turn off their spigots and thus send the price lower (more supply coming into market), thus causing pain and suffering to the very US energy companies who facilitated or directly influenced the domestic exploration in the first place.   Once these “evil companies” are snuffed out, OPEC may turn the spigots off again, let demand consume the supply, and thus the prices will resume upward.   Call me a conspiracy theorist but that is my opinion.

Oil chart, with comments, below:

– Greek Parliament elections planned for January 25:  Yes, it is “them again” aka Greece, affecting the markets.   As some may recall, the International Monetary Fund (IMF) and European Union (EU) previously agreed to assist with bailing Greece out of its financial problems, however the SYRIZA Party, a leftist party, is favored to win Parliament on January 25.    The leader of this party wants “debt restructuring” which basically means he wants to call MasterCard and tell them the agreed-upon agreement ?   Nah, I just decided it will not work and I don’t want to abide by it.    This is a dangerous action, and most of us have seen what a political party can do, aka Hugo Chavez/Venezuela or Evo Morales/Bolivia.   Basically anything they want to do, to include re-writing their Constitution.   This situation bears watching.

– Republican control over Congress:   As of January 6 2015, the Republican Party has complete control over Congress, led by Mitch McConnell and John Boehner.   While this did not cause the Dow to go down, it is fruitful to watch because historically the markets do best under a Republican Congress and a Democratic President.   The good folks at the Hirsh Organization discussed this on page 101 of The Almanac Investor.  The same folks have conducted extensive research on the “January Barometer” and “January Effect” both of which have proponents (I am one) and naysayers.  At this point, it is not known if Republican control over Congress will positively impact the markets.

– Remember that the markets are a leading, not lagging, indicator:  This statement always generates some email traffic, and a Google search will return umpteen thousand theories, however my belief is that the markets stall out before major economic news of reflecting a recession/depression or worsening economy.    They also go up far in advance of news/reports of a recovering economy.    So our current action may be the harbinger of negative news in 12-18 months.   Remember we have almost guaranteed interest rate hikes summer/fall 2015.  

– In the “Other” category:   I am mostly a technical analysis investor, with some fundamental theory, while others are all fundamental analysis.   A technical guy believes “it is all about the price”, a fundamental guy believes it is about “valuation” and “worth” and “future earnings” etc. stuff.   Which is all fine and good, in the academic confines of business school.    So this guy and I engage in an email discussion on which school of thought is “valid” (similar to which religion is “valid”).   Long story short, I told him fundamental analysis is akin to valuing an antique muscle car (Pontiac GTO) merely by the sum of its component costs.   Four rubber tires cost X, the carpet costs X, the metal in the body and bumpers are worth X, thus, according to fundamental analysis, this muscle car should only be worth X.   However, I pointed out that in an auction environment (the stock markets are indeed auctions), the price of this car is irrespective of component costs, it is based on the emotion, sentiment, and perceived value by the bidders, who will likely run the price up high enough until it is sold.     After I explained it that way, this guy stopped emailing me.  

On that note, I remain 100% S-Fund but a move to G-Fund may be necessary to stop further bleeding and prevent additional damage.

Thanks for reading…

– Bill Pritchard

Hello Folks and Happy New Year

2014 trading is now over, with December 31 being the last day of trading for the year.   Unfortunately, the markets closed down today, with the Dow Jones Index down 160 points.   The SP 500’s December gains were erased as a result of today’s performance.   Volume was higher than prior day, but still below its average trading volume, obviously a result of many market participants being out of the game for the holidays.   However I would have preferred an “up day” on the last day of the year, versus a down day.  Investors Business Daily is reporting six (6) Distribution Days on the SP 500 within the last few weeks, which is a negative sign.    Some observations:

2014 Close-out observations

Here is a chart of the SP 500, without comments, my primary graphics program is Window’s based and I am on Annual Leave with my MacBook, and have yet to “master” the MacBook graphics editing software I have installed.

Some positive observations are the SP 500 closed out 2014 up 11% for the year, notwithstanding quite a bit of turbulence throughout the year.   Small Cap stocks (S-Fund) will likely come in as top performer for December, and out performed the last three months, according to my analysis.   I-Fund underperformed both the C-Fund and S-Fund for the year, not a huge surprise, due to various international flare ups and global economic issues.

Another positive observation is the “2080 level” on the SP 500 was broken on December 23, reflecting the market’s desire to seek higher altitudes, a positive sign.

Note that the first trading day of the year, Friday January 2, is sandwiched between Thursday (New Years) and Saturday, and it is unlikely we see any huge market volume that day.   With that said, an “up day” is preferred versus a down day, as the first day of the year “sets the tone” for the mood and sentiment of the market.   I remain 100% S-Fund.

2015 Observations and Challenges Ahead

As stated above, the first trading day(s) of the calendar year “sets the tone” for the rest of the year.   So we need to monitor that.    In addition, Crude Oil continues downward, it is currently trading at $53 a barrel level.   See chart:

While “cheap gas” is good for consumers, Mom and Dad who are deciding to top the minivan fuel tank and take that road trip or not, depending on what circle you ask, it may or may not be bad for big business.  I sat down and had lunch recently with a close friend who is employed in the Oil and Gas exploration industry in West Texas, he felt that $70 a barrel crude oil was the magic number so everyone makes money but fuel is not super expensive for the end consumer.   West Texas exploration, to include fracking, has slowed down significantly,  and as we enter 2015, Oil and Gas (aka “ONG”) companies will be re-assessing 2015 projects.    Lets take a look at the screen shot of my iPhone Rig Data app, which shows oil rig activity in proximity to your GPS location.   The red pins represent an oil rig.

Immediately apparent is the extensive drilling activity in Texas, especially near the Big Lake, TX and Carrizo Springs, TX areas.    While this does not directly impact your TSP balance, I feel this information sheds some light on the oil production going on in our country, as our domestic companies try to deliver product to the end-user while seeking to keep the Supply/Demand equation in balance so that prices are not too cheap nor too high.

Additional challenges we face are the interest rate hikes expected in summer/fall 2015,  which may reduce lending and business activity, which may then affect other things.   Note that historically, markets never have positively respond to interest rate hikes, so expect some turbulence in response to this, up to and including a new bear market as a worst case scenario.

One more challenge is the fact that the current bull market is very mature, being six (6) years old now.   So we are “due” a correction/bear market, it is just a question of when.

With that said, I remain 100% S-Fund.  We had tremendous subscriber growth in 2014, thanks for the interest and support.   I get a lot of cool emails and appreciate all of them.   Please continue to share this site with your friends and coworkers.  I wish everyone a Happy New Year and see you in a week or two with another update.   Thank you !

– Bill Pritchard

Hello Everybody

The markets had been in a nerve wracking decline since December 8, however found “a bottom” at the 1972 area on the SP-500 on December 16, then resumed upward rather strongly after that.  I did not get overly concerned (but yes, somewhat concerned) because my other indicators were not flashing red flags.    Various opinions exist on the cause of the decline, mostly this was attributed to Russian economic problems and President Putin.   Apparently cheap oil is not good for Russia’s primarily oil based economy (they don’t produce much of anything else) and fears of a Russian economic collapse sent global markets down.   We also had folks in financial press discussing why “cheap oil” is bad for the US economy.    Which of course I can’t agree with, as cheap oil means people will take road trips, airlines will report higher profits, FedEx pays less to fuel their trucks, and oil based products such as vehicle tires arguably will not be priced as high.  I wonder how the economy would do if gasoline was $8 a gallon instead of $3.   

Fast forward a few days after Dec-8 to the FOMC meeting and there is no indication that the expected Summer/Fall 2015 interest rate hikes will be accelerated, a worry in some circles.   This, combined with the abatement of Russian fears, sent markets soaring.    This is also why I analyze things based on numerous indicators and not just what happened on one day.

It is important to note that the S-Fund is the top performer so far this month, however C-Fund is very closely next in line.   My TSP allocation remains 100% S-Fund.

Some trivia regarding this past week’s events are that our two consecutive 200+ point gains in the Dow Jones Index, which occurred this past week, occurred previously the only other time was six years ago.   So the market is displaying “positive behavior” not typically seen.  The SP-500 had the best two day gain since 2011.   And on December 18, the Dow Jones Index had its biggest one day gain in three years.

The new “overhead resistance level” on the SP 500 is 2080.  Any penetration of this level is an All Time High and a good thing.   Crude Oil is at not-seen-since 2009 lows of $55.   I attribute this to our fracking oil exploration (I have friends in this sector) which is partially derivative of President Bush’s desire to not rely on OPEC.    Like all supply and demand equations, a Catch-22 exists, you can produce yourself (provide supply) out of business via cheaper and cheaper prices and soon it costs more money to drill the oil, and extract it, than it is worth.    That is beyond the scope of this site but you get the idea.

See some charts below regarding Crude Oil and SP 500 Index

In summary, it appears the recent speed bumps are behind us and the market has found a new uptrend.  I remain 100% S-Fund.     Note that Dec-22 week trading will be light, anything that happens that week can be basically discarded as unreliable action.   Ideally we do exit 2014 on an uptrend, as this “sets the tone” for the New Year.

I wish everyone a Merry Christmas and Happy New Year, as I will not likely be reporting much during the next two weeks.   I hope over this year, this site has generated thought, increased awareness of the markets, protected your balance from some damage, helped your balance realize gains, and provided some entertainment.   If the above have occurred, then 2014 was a good year for this site.  Please continue to share this site with your friends and colleagues and encourage them to sign up for free e-mail updates.

Thank You !

– Bill Pritchard

Putin is killing me.   I am not pleased with December market’s performance so far.  Those in international stocks, especially emerging markets, are seeing extensive pain.  Plan on a more extensive update and discussion this week.

– Bill Pritchard

Hello Everybody

Not saying that I predicted this or anything, but I am not completely shocked that after the AM sell off yesterday Dec 9, the markets spent the rest of the day basically regaining ground.   The NASDAQ (the location of almost all small caps and thus S-Fund holdings) actually closed 25 points to the positive, the SP 500 (large caps and thus C-Fund) closed almost positive, and the Dow Jones Index (large caps and thus C-Fund) didn’t quite do as well, it attempted to go positive but did not make it.   However, I am much more at ease now that the markets displayed a desire to regain lost ground.    Night-time SP 500 futures reflect a continued desire to seek higher territory.   I am TDY with my MacBook so my charts and graphics are a little different.  See chart:

The green circle shows night-time action, which is higher than the prior red bar, displaying daytime 12-09 action.

I remain 100% S-Fund.    This leads to a very common question I am getting from my great readers via email, which is “When you say you are 100% S-Fund, what does that mean.”    To that, I request folks please take a look at the FAQ, especially FAQ #10, at http://www.thefedtrader.com/qa/     That is my most common question via email.

Some other items, I am posting this “value added material” as it has some nexus to TSP and retirement.  I am cut and pasting a portion of the text as some subscriber’s work email do not allow for clicking on external links.

– Roth IRA’s require new election in 2015, per Military.Com website.    See link.  Cut and pasted from the site is:

In the past (and through 31 January 2014), contributions to Roth TSP accounts were made by designating a dollar amount that you wanted contributed.  Beginning 1 January 2015, those same Roth TSP contributions have to be made as a percentage of each of your pays, including basic pay, incentive pay, and special pay.  You can still make a dollar amount election for bonuses.

The important part is that you have to make the changes in January 2015, or Roth contributions will stop effective 1 February 2015.

– 2015 TSP Contribution limit is $18,000 and it is being advocated on other sites that TSP members go to Employee Express and elect $693 TSP contribution per pay period, by Dec-13.

See this USGS bulletin directed towards USGS employees (but useful to read for all federal employees) for further info.

– Don’t forget your FLEOA, PLI Insurance premiums for the new year ahead.

– As we approach the end of the year, it might be time to assess health/age related issues and look at Long Term Care Insurance.  Many government retirements occur at end of year, so this is a time to give this topic some thought. Suze Orman and Dave Ramsey tend to recommend LTC if age 55 or older.   BUT, each situation is different.   The federally endorsed program, is at https://www.ltcfeds.com/

** This site is dedicated to my personal opinion and observations regarding the TSP funds and the stock market.   The above information is “FYI” stuff.  I am not fluent (nor try to be, that is why a your heart doctor does not perform LASIK eye surgery on the side) in every topic, such as Roth IRA’s, tax planning, etc.   For specific questions on that, the best resource I recommend is Dan Jamison, CPA and retired Special Agent, whom I correspond with frequently regarding topics of common interest as they relate to retirement.   His email is dan@fersguide.com

“How do I log into Employee Express” or “Should I choose this option” type of questions are “not my lane” please contact your Help Desk, Payroll Office, HR, Benefits Specialist, etc.

Lets see how the week plays out….hopefully the markets will resume their uptrend as the week continues.  I remain 100% S-Fund.

Please continue to recommend this site to friends and coworkers.   For those who receive updates via email, please forward the update to those who may benefit from the information.

Thanks for reading

– Bill Pritchard

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