Sunday Update: 05 March 2017

Current Allocations: 34% C Fund, 33% S Fund, 33% I Fund.

The market continued its climb higher this week, hitting the 2400 level on Wednesday before reversing.  At 2400, the S&P500 (C Fund) is just 2%-4% below our target top of 2450-2500.  If you are risk averse or retiring within the next 6 months, I would consider moving some of your gains to the G fund.  Wednesday’s gap up is a good indication of the volatility that will happen as the market is topping, but it will not always be positive…

Short Term

The market gapped up on Wednesday following the President’s speech on Tuesday night.  A gap is an area in the price chart where there are no trades.  There are several types of gaps that can indicate different possibilities for the market going forward.  In the case of Wednesday, we have the possibility of an Exhaustion Gap.  An exhaustion gap happens near the end of a significant trend, either up or down, and is followed by a change in the overall trend.  Next week could be very significant for the short term chart.  If the market stabilizes and closes above 2400 then we’re still in the game.  If the market rolls over on big volume and closes below 2350, then the top was in at 2400.  With the indicators rolling over, I’m not optimistic but we’ll know this coming week.  Fortunately our risk is very low.  The difference between 2350 and 2400 is only 2%.

Long Term

The long term charts still have room to move higher but are looking very toppy.  On the 2 year weekly chart of the C fund, the price chart hit the upper channel line and reversed lower.  While the MACD and Divergence indicators are still moving higher, they are at relatively over bought levels.

The long term S fund chart looks worse than the C fund.  The S fund reversed and closed at the same level as it began the week (not a good sign).  Additionally, the MACD and Divergence on the S fund chart are about to turn negative.  We’ll see if the S fund leads the market lower in the coming weeks.

The I fund chart looks the best with room to move higher in the channel and the indicators still positive.

Next week could be very telling.  If the S&P500 (C fund) closes below 2350 with some big volume down days then I will likely be moving to the G fund.  Stay tuned…

Please share with friends and co-workers and have a great week!

Jerry