The Fed Trader

Hello everyone

The first month of the year is behind us, and as expected, the S-Fund came out the top performer.  On January 2, I discussed how the S-Fund would likely be the place to be, out of ten different fund choices that exist.  Subsequently, the S-Fund outperformed all funds, with a 6.96% return.  Please see graphic from the official TSP site.

My analysis of January’s activity reflects that I-Fund is “catching up” to the S-Fund, performance-wise, however for the present time, I am remaining 100% S-Fund.  This is due to various reasons, the first and foremost is, my analysis of the markets reflect that S-Fund will likely remain strong, and that historically, in February, small cap stocks outperform large cap stocks (international stocks are not part of that historical study).

Some notable events have occurred this past month, such as AAPL stock suffering hits to the downside as investors wonder if AAPL’s growth and ability to obtain new technology breakthroughs have stopped or slowed.   In addition, Android growth has seriously impacted AAPL’s earnings.   Since AAPL is a major member of the NASDAQ, this has caused that index to go down somewhat.   Are the markets “headed lower?”  No, this is just one stock affecting things.    (AAPL is not a small cap stock by the way).

Some have emailed me and asked why is the market going up, if the economy is still down.   I offer this explanation, that historically, the stock markets are a leading indicator of economic events, not lagging.  In other words, in six to twelve months, we may see the economy finally getting back on track.  I might add that some believe it already is flashing signs of life.   At the end of the day, I simply respond to the markets themselves.   To further that theory, I am posting a Jon Stewart video, who criticized Jim Cramer.   Watch this video and you will understand why people should not blindly listen to “experts” on TV.  I have no personal opinion regarding Mr Cramer, but as they say in some circles, “it is what it is.”  Video is courtesy of YouTube and MSNBC.  You may need Google Chrome for the video play properly.

As of 02-04-13, I remain 100% S-Fund.   I am monitoring the other funds and as discussed, the I-Fund is showing some promise.   Last month, this site provided some insight into fund choices, ten choices of which TSP investors must wrestle with and attempt to decide on.  This site provided accurate information as to the top performing fund(s) and delivered to subscribers the #1 fund at the time.  Thank you for reading.

Bill Pritchard

Hello Everyone

As we enter mid-month, I wanted to update everyone as to the market’s performance.   The SP 500 Index, which I use to measure the health of the market, is at new highs, never before seen since 2008.  On Friday Jan 18, it had reached a high of 1485.98.   Call it “1486” and basically anything above that is untouched territory.   That is a good thing, as it indicates that money is coming back into equities (stocks) and propelling the market higher.

I should also mention a concept known as “The January Barometer”, developed by Yale Hirsch in 1972.  Hirsch later developed the Stock Traders Almanac.  In summary, if January performs well, then the rest of the year will perform well.   This indicator has a reliability of 90% since 1950.   Recent terrorism, global financial problems, and other things associated to the 2000’s have impacted this indicator, however it is still an indicator one should be aware of.

Lets take a look at the last few days of the SP 500 Index, see image below.   You will see on Jan-2, huge above average volume, with the index closing up, occurred.  It should be noted that this was the first trading day of the year, and instead of people entering with caution, worried about the future, people jumped head first into the market waters.   This is known as “accumulation” and is indicative of large amounts of money entering the market.   Then the index became quiet until Jan 15, then resumed the uptrend, with additional above average volume.

An analysis using my proprietary system indicates that the S-Fund should outperform all other funds this month.  The month is not over yet, and things may change, but my opinion is that the S-Fund should lead the funds in performance.   There has been occasional strength flashed by the I-Fund but this has not lasted more than one to three days.  At the end of the month, you may indeed see I-Fund closely perform as well as S-Fund, depending on how things play out.

At the present time, I am 100% S-Fund.    If you find this site useful or informative, please pass the word and tell your friends and coworkers about it.   Also, thank you for the numerous emails and compliments which have been sent.  Thank You.

– Bill Pritchard

Happy New Year (again) –

As the first week of the New Year comes to a close, it appears we are definitely on the “right foot” as far as the markets go.  Once the Fiscal Cliff situation got (apparently) resolved, the markets responded strongly with a strong vote of confidence, closing up on huge volume.  The exchange traded fund, SPY, which is a proxy for the SP 500, gapped up, which is a very good sign of strength going forward.

A look-back on the week’s fund performance, shows that small cap stocks are performing best so far, which would correspond to the S-Fund.  Next in line were large cap stocks, which would correspond to the C-Fund.  I-Fund is last in line.  Again, this is looking back the past trading week.

For now, I am 100% S-Fund.  As long as things are going smoothly, I will slow the updates down and not clog everyone’s inbox up.  Expect another update in two weeks or so.  See you then.

Bill P

Happy New Year and Hello from annual leave status

I am off, on leave status “New Years week” and what a better way to start the New Year then with a market rally.  The markets welcomed the Fiscal Cliff deal passage, and rallied strongly this morning.  Current time is 10:10 AM Central Time, with the SP 500 up 1.77 %, Nasdaq up 2.3%, and Dow up 1.7%.

This rally is accompanied by high volume (even at this time of the day, I can determine that the volume is above average), giving a lot more credibility to the fact that it is “for real” and with institutional money behind it.

With the Fiscal Cliff issue resolved, I see no major speed bumps ahead.  I think everyone is sick of Greece’s economic issues (yes remember Greece, I almost forgot about them…) and is simply just moving forward at this point.   We have some other issues ahead, such as the fact that on Dec-31, US hit the debt ceiling, and if it is not raised, our credit rating as a nation may be downgraded.  The date to raise this is approximately Mid-March 2013.

However, I am not worried too much about that right now, as all indications are that the markets are resuming an uptrend.  Also, historical studies have shown that the performance of the markets during the first few trading days of each new calendar year “set the tone” for how the rest of the year will be, performance-wise, so it looks like we got started in a positive manner.

In summary, I am returning my TSP to the stock funds and will be 100% S-Fund starting today Jan 2 2013.   Thank You

Bill

Dec 30 2012, 8PM CDT Update

Public news media is reporting that no Fiscal Cliff agreement has been reached, and talks will resume at 11 AM Eastern time on Monday Dec-31.   If this is not resolved by Jan-1, I anticipate a negative market response with a strong sell off and decline.

Lets take a look at the SP 500 Index chart.  You will see a drop in the index on Dec-21, along with above average volume, which is indicative of distribution or selling in the index.  The above average volume is double-worrisome, because the markets are historically low volume during Christmas week.  In other words, we had a historically low volume week, but on Dec-21, we still had high volume coupled with a downtrend.   The following days the market continued lower, albeit on lower volume.

Lets take a look at the SP 500 futures, which trade into the evening, after the regular stock markets close.  You will see that the market sentiment continued, with a downtrend in the futures.

As of now, 8PM, the SP 500 futures are at 1389, which is not much different than Friday’s performance.

Lets see what shakes out between now and Jan-1.   I am personally 100% G-Fund, my TSP balance is not exposed to any volatility or damage which may occur.

Thank You

Hello

Monitoring the news media, there is no agreement yet on the resolution to the Fiscal Cliff situation.  The Washington Post has reported that an unofficial deadline is Sunday Dec 30 at 3PM Eastern Time.

“….Reid and McConnell have set a deadline of about 3 p.m. on Sunday for cinching a deal. That’s when they’re planning to convene caucus meetings of their respective members in separate rooms just off the Senate floor. At that point, the leaders will brief their rank and file on whether there has been significant progress and will determine whether there is enough support to press ahead with a proposal.

“They both know the clock ends Sunday,” said Sen. Mark Begich (D-Alaska)….”

With that said, we are almost one hour from that deadline now (I type this at 1:50 PM Eastern time).  The SP 500 futures are not trading yet, but will trade this evening electronically.  Worldwide traders have access to the SP 500 futures, and these are extremely reliable indicators of “sentiment” and response to market forces, such as the Fiscal Cliff situation.   It will be interesting to see how they trade tonight.   They closed on Friday at 1388.

I will update everyone tonight.  Thank You

Bill Pritchard

Dec 28 2012 / 5 PM CDT

Fiscal Cliff and your TSP

I will post more in-depth information at some point this weekend… the SP 500 futures (which trade into the night) have basically crashed 22 points down this evening.  This past week’s stock market activity have been reflective of a pending downtrend.

In short, the followers of this website ideally are already 100% G-Fund, thus protecting their balances from any market crashes.   Remember, in this market environment, balance protection, not gains, is the priority.  We can worry about gains later, however gains cannot be made on a zero account balance.

I will post additional information in the next 24-72 hours.  Thank You

Bill Pritchard

Merry Christmas and Happy New Year to the followers of The Fed Trader !

Bill Pritchard

Hello from Wichita KS airport and free wi-fi

The fiscal cliff negotiations have broken down and now, everyone returns to the table after Christmas. Observe that Dec 31 is the deadline

last night, SP 500 futures went down 20 points, which is a huge move down. Today, Dec 21, I expect the market to go down, likely severely.

hopefully most followers of mine are in G Fund and thus their balances are not exposed to this potential damage today.

Thank you…I wanted to get that out there….I will monitor things and update as we get developments.

I am 100% G Fund for now

– Bill P

Hello to all

This past week the markets flashed some signs of optimism, and penetrated the 1425 level on the SP 500, which I had previously discussed was the “resistance level” for the index.   See chart below

This occurred on Dec-11 and Dec-12, likely a positive initial response to the FOMC meeting and the fact that the International Monetary Fund agreed to additional aid payments to Greece (“publicly announced” on Dec-13).   On Dec-12, in the morning, it climbed steadily and hit 1438, a new recent high over recent months.   Absent additional information, this would be good news, having successfully punched thru the 1425 level.  However, after the FOMC’s intentions were disclosed, the market quickly “sold off” and went lower on the afternoon of Dec-12.   As of Dec-14, the last trading day of the week, the index has not recovered.   Please see below 3-day chart, showing minute-to-minute “tick data” of the SP 500 index

Based on the above market behavior, and the inability to stay above 1425 for very long, I am still in G-Fund.  Lets remember that midnight (or 11:59PM ?) on Dec-31 is the deadline for the Fiscal Cliff issues to be resolved.  After that passes, mandatory tax hikes and other things go into effect.  Obviously with negative market consequences.  As a reminder, during Christmas week, very little volume will occur in the markets, as most money managers and traders will be off during that week.  Any market moves that week (up or down) are questionable, as without sufficient volume, they are untrustworthy.

100% G-Fund for now.  Thank You

Bill P

.