401K Monthly Analysis – How High Can We Go? 6/1/13

The market has shown incredible strength this year. The conservative rich may very well complain about the Government’s policies and hang right but they must be doing it smiling their way to the bank or whatever off shore accounts they have their tax-free money in. For the rest of us toiling people, we cannot help but what wonder when will the axe fall on the market? And what if we haven’t participated in these up times? Do we get in now? A soothsayer I am not. All I can call is the market tea leaves as they show today. I am also affected by the “nearness syndrome” which is what happened last Friday – a huge 200 point drop in the Dow.

Starting with the overall market charts we see that the market is still pointed up but  generated a short term sell signal (small arrow down on the chart below) while the primary signal remains Up. I would tackle this by taking some money off the table and not commit all my monies into the market. Don’t forget the old adage “Sell in May and go away”. I think you can come back in October. But this has been a strong year and I don’t think we are falling off a precipice. The Bond funds are looking weak and I have exited them all. When the market does signal down, I am not planning on hanging around; but that is for another day.

I synchronized all my folder funds with my employer’s current 401K funds. Over time they drop some and add others and I have been remiss in my updates so I did it this weekend. My top fund choice remains same as last month, WFA SPL MidCap VL with chart below. It has been breathing some rarified air as it has climbed and climbed while knocking down 52 week highs. Next choice is Fidelity Large Cap (chart attached) and then Fidelity Blue Chip growth as third. Behind these is the Royce Opportunity fund but I do not like to pick something that will charge me a redemption fee unless I stay in it for 90 days, so I won’t go there.

For my previous employer’s 401K the choices are Spartan Ext Mkt, Vanguard Explorer Admiral and Fidelity Low Priced Stock fund. Fidelity Growth comes in 4^th and all these are the preferred choices; but consider leaving some money in cash and one’s powder dry.