The market has bounced from its lows and it is normal to feel
that I should get back into the market. Having avoided the drop, I have to now
look at re-entry. The overall chart on SPY shows an up signal but will soon run
into resistance at 204. The market is still seeking direction. Short term
stochastic is high and I expect some pull back. See chart below on SPY.
It is also interesting that in my 401K analysis the funds
that are coming up for investment includes Contra funds and bond funds. This is
the first time I am seeing bond funds show up. Not a good sign… as this is a
momentum based system and normally it stays in stock funds. Also most of the
funds are showing negative values when analyzed across a longer 3 and 6 month
performance time frame. I do not like to put much money into the market when I
see negative results over a longer time frame as this. Therefore I will sit
out.
In my previous employer’s 401K funds the top choices are
Fidelity Contrafund, Fidelity Freedom 2000 and Fidelity Govt Income.
In my current employer’s 401K the fund choices are now also
more conservative. The top funds are Fidelity Freedom 2000, Fidelity Govt
income, Spartan 500 Fund. The last one is similar to SPY. The choices of funds that
the system is introducing are more bond funds, at least at a 50% level.
I am sitting in money market in my 401Ks and will consider
getting back into other funds in a small amount only after a pullback on SPY. That
will be tricky as the pullback could change into something worse; but as long
as I have an up signal on SPY I will be looking for an entry.
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