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| Today's Commentary (Short Term Outlook) |
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Early rally cools off As expected, stocks opened strongly after Alcoa's earnings beat estimates, but after a strong morning of trading, the triple digit gains in the Dow faded some by the close, mainly because of a weak showing in the 30-year bond auction. The Dow closed up 61-points. The TSP stock funds were all up. C-fund +0.75%, S-fund +1.21%, and the I-fund was up 1.78% on more weakness in the dollar. The F-fund lost 0.22%. With the Dow up over 100-points, the results of the 30-year bond auction sent yields higher (bond prices lower) and this was a concern for investors as you can see the stock market's rally ran out of steam at the same time. It could be a sign that "foreign buying fatigue is setting in."  The S&P 500 did gap open and it did not close intraday. We have now had a decent rally off of last week's low and with the wedge formation squeezing in a little more, we are already seeing the index nearing the overhead resistance.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk A closer look shows the new open gap between 1058 and 1060. You can also see that the S&P closed well of the high as it pushed over 1070 at one point Thursday morning, but settled the day at 1065. Volume was up, but still relatively light.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The S&P is now just 15-points off of the high made in September so if the S&P 500 is going to make a new high, it only has about 1.4% to go. When the Dow was up 100+ points yesterday morning, I took that as the sign to take my money off of the table. Maybe not the smartest thing to do with this much momentum in stocks, but I made about 4% this week and I don't want to push it, as I talked about yesterday. The TSP Talk Sentiment Survey came it at 55% bulls, 34% bears for a 1.62 to 1 bulls to bears ratio. That is quite a swing from last week's 37% bulls, 50% bears, 0.74 to 1 ratio, and the 1.62 to 1 ratio is the most bullish (bearish for stocks) since December of 2007. Since we are flirting with new highs, the high ratio doesn't surprise me, but the move from 0.74 to 1.62 in one week does. We are a fickle bunch, aren't we? The stock market will be open on Monday (bond market will be closed) but the TSP wll not be open so if you want to be in a particular fund on Monday you'll want to make your interfund transfer this morning (Friday) as usual, but don't forget that you cannot make another transfer until Tuesday. Well, you can make the transfer but you won't be in your new fund until Wednesday if your transfer is done after 12 noon ET on Friday. Per the TSP: The Thrift Savings Plan will be closed on Monday, October 12th, in observance of Columbus Day. Transactions that would have been processed Monday night (October 12th) will be processed Tuesday night (October 13th), at Tuesday's closing share prices. That's all for today. Thanks for reading. Have a great holiday weekend! |