Sunday Update: 25% C Fund / 25% S Fund / 50% G Fund Until Further Notice.

Short Term

It was a great week for the stock funds!  All 3 funds made gains for the week with the C fund hitting record highs.  We have come a long way, without a pause, since the lows following Brexit.  We are definitely overbought in the short term but the long term is looking really good from here.  I am expecting to see some consolidation next week as the market digests the big moves from the past few weeks.  Ideally the S&P will stay above the 2100 level and consolidate on low volume.

20160715Cfund6MonthDaily

Long Term

Since we are 50% invested in the stock funds, and the long term charts look great, we want to look for a good opportunity to increase our current stock allocation.  I am looking to get fully invested in the stock funds on the next follow thru day after consolidation.  Ideally, this will include the I fund.  If the I fund can break thru its 50WMA it could lead the way forward as the double bottom is a strong pattern (see I fund chart below).

20160715Cfund2YrWeekly

20160715Sfund2YrMonthly

20160715Ifund2YrWeekly

Very Long Term View

Elliott Wave Patterns help to identify where we are in market cycles.  The pattern includes 3 steps up and 2 steps down (side ways) for a total of 5 steps.  There are very specific rules for counting and the patterns are open to interpretation but, over a long time period, Elliott Wave can be very effective as a predictive tool.  The chart below is a 10 year weekly chart of the S&P500 (C fund).  I have marked the general steps within the long term channel lines, beginning from the low in 2009.  IF the pattern continues and IF my count is correct, we may have just begun a rally that could take us up to 2500 or higher by mid-2017.

20160715ElliottWaveCount

Please post questions to comments and SHARE.  Have a great week!

Jerry