We had a great run since the last Alert that posted on 24 June. It’s a good idea to look at the charts from the last Alert and compare with the charts in this Alert. We want to be on the “Right” side of the market. With the stock funds rolling over and the F fund continuing to make new highs, today’s allocation change puts us in a great position.

The Charts at Time of Alert Decision

We had a nice little run since the last Alert. With the C fund gapping down and intra-day below the 10DMA, the risk of continued price decline to the 50DMA outweighs the odds of a move higher. If the C fund was the only issue, I’d give this another day to play out. However, the price action on the S and I funds are worse and corroborate continued price decline.

Additionally, the Silver Cross Indicator looked like it was turning the corner in late June. It has now rolled over and is clearly lower than the March low. Not a good sign…

As we’ve been discussing for months, the 2250 level on the S fund is key. A big part of the analysis for the last Alert was the S fund putting in a daily close above this important level. We had hoped that the weakness in the S fund over the past few days was a retest of the 2250 level. With today’s gap down below 2250, the 10DMA, AND the 50DMA, the S fund is back in the trading range. The breakout is now invalidated. Worst in this chart is the intra-day low below the mid-June low. A daily close below the 50DMA is a big problem for the S fund.

The I fund gapped down below its lower channel line. This is a pretty long term channel and certainly a problem for the I fund. There is a ton of support around 76. If we get a daily close below 76, the I fund is in real trouble.

The F fund continues its rally and has made some nice moves higher since the last Alert. Having said that, as the F fund approaches its all-time high at 117.62, we should expect some resistance. The question will come up, “Why not reallocate to 100% F fund?”. The answer is that we are approaching resistance at the most recent all-time high, AND the F fund is very far extended above its 10DMA.

Bottom Line:

We have made some decent gains since the last Alert. At this point, locking in those gains makes sense. The F fund is clearly in rally mode so, I will keep my 50% allocation there. The stock funds are breaking important support levels. We will look to get back into the stock funds when the rally resumes.

I expect this will be a short term correction. I anticipate using my second IFT for July to get back into the stock funds. As always, the market will let us know…

Jerry