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