My Technical Thoughts: The 20 day SMA fell below the 80 day SMA for the S Fund on 25 April 2014 for the first time since 2012. The 50 Day SMA compared to the 200 Day SMA has yet to cross over. However, on 25 April the 50 Day SMA was @ 34.3775 and the 200 day SMA was @ 32.2888, or 6.47% over the 200 SMA. COB yesterday the 50 day SMA was @ 33.8754 and the 200 day SMA was @ 32.8133, or 3.24% over 200 SMA.
My Gut thoughts: What does this all mean? We may be seeing all new highs for this market (e.g. climbing the wall of worry) but this market is contracting. I don't know the technical term for the opposite of a trough market , but in my opinion that is what we are seeing. I'm not stating the market is going to make a major correction shortly. In all likelihood I think the market will continue to whipsaw through the summer hitting new highs with mom and pop not noticing the 50 day SMA crossing below the 200 day SMA in most index's which is a bear market indicator to wall street. I would expect as of today a 5% something S Fund as of end of October and wall street to pump the Santa Rally EOY to just short of 10% (long story short, this is not 2013). I think wall street will strike and the bear will arrive in the first half of 2015.
All of this though is long term out, the market could be drastically different in 3 to 6 months and I'll post my thoughts at those points. In the mean time we are whipsawing and I'll project out the 3.4% S Fund YTD to 4.5% end of 3rd quarter. So I have two options, buy and hold for 1%ish or market time the 3% whipsaw every month? I guess that all depends on how good of a market timer you believe yourself to be, and the risk you are willing to take (e.g. willing to loss 9% this summer over gaining 1%). I'm sure Boghie will way in.
My Seasonal Thought: Sell in May and go away.
Finale: I'm going to try and time the market this summer as we continue to contract to the top. I don't think it takes to much time to determine if the market will turn in the next day or two if it's up 4 - 5 day or visa verse, or if we start kissing a boiler band; you might not get it the exact day but you'll end up the month over 1% with 15 minutes of time spent in the morning over the month, which will beat buy and hold.
I'll post on the F Fund in the next few days.