LOL.....thanks.....I don't need the wrath of god....I won't ask again
OK, I'm going to revisit the post that started this and hopefully get it right this time with a bonus comment :nuts:
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The pucker factor was way up yesterday and I won’t be surprised if it continues into the next couple of days. I came very close to switching over to the G-fund today but ultimately decided to hold because of something I said a few days ago about three probable courses of action as the S&P 500 moves through the zone of the 1st half of the years channel.
The three options I presented were:
Option 1. the market punches through without stopping
Option 2. the market shifts to the old channel
Option 3. the market collapses and we get a major pullback
Today looked like option 3 was going to happen, however, the current channel survived, which is why I ultimately decided to hold. Let me explain my thought process further:
Option 1. Remains viable as long as the current channel stays intact
Option 2. There are two ways the market could make this transition,
2a. by either dropping down through the current channel but finding support at the old channel.
2b. by moving sideways until it leaves the current channel.
I don’t really see 2a as being viable, I see this as leading to option 3 – pullback. So if I see the market breakdown on high volume and high volatility, I am going to get out. However, as long as option 1 remains viable, I really don’t want to get out unless I absolutely have too – which means only if a pullback is eminent. If after a few days, we move sideways out of the current channel, then I will be much more likely to punch out on a day like today. If we do transition from the current channel to the old channel, the initial few days are going to be the most likely candidates in which a pullback would occur. At this stage of the game, I have absolutely no intention of trying to do short term timing.
If we move into the old channel and it is able to reestablish itself, then I would be more likely to start trying to time again. Which brings me to my last little point. The dollar index made another drop and is starting to get precariously close to the bottom of it’s current channel. Again, I will not leave the S-fund as long as the current channel is intact (and the dollar index stays in it’s channel), but if we do move sideways into the old channel, the I-fund becomes an option I will strongly consider.
Here's the bonus comment: When it comes to the Fed and the stock market, there is a wishful thinkng move, a status quo (or OK) move and a bad move. For example, January to March, no hike was wishful thinking, a quarter point hike was status quo...but a half point was bad (we never got one of these), then in April and May, a quarter point was bad and no hike was OK (a drop was wishful thinking), but we continued to get hikes. It was after two of these that finally sent the market into a fit. If you follow this logic through the rest of the summer, you see that the market can sustain positive momentum for a couple of bad moves. Industry/media always tries to lead the fed where it want's it to go so it is always ahead of the game in saying what is status quo and what is bad.
Now we are back in the situation where a hike is bad, no move is status quo and a drop is wishful thinking. However, Industry wants us to believe that a drop is status quo and no move is bad. There argument is the housing market and the foreclosure rate. It takes time for the market to transition and I do not believe we are at the point where a no move is bad. This is why I do not believe a pullback is upon us. I also recognize that I may be wrong, so I am keeping an eye out for it.
