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Barely holding support
Stocks were mixed
yesterday on more debt concerns coming out of Europe, but again we saw an
early sharp decline turn into only modest losses. The Dow lost
37-points and the S&P was down less than 2-points, but the market leaders,
the Dow Transports, the Nasdaq, and the small cap indices, were all up on
the day.
For the
TSP, the C-fund lost 0.14%, the S-fund
gained 0.43%, the I-fund dropped 0.78%, and the F-fund (bonds)
added 0.09%.
The S&P 500 broke below the
lower end of the narrow rising trading channel in early trading, but again
closed above it. This is either an indication that buyers are willing
to step up on these dips, or the break could be a weakening of support.
In the morning, when we have to make or transfer decisions, it is tough to
jump on the buy side when the S&P is below that support line.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The Dow and NYSE have been testing their 20-day EMA's but the the S&P and
Nasdaq have remained above theirs.
The AAII Investor Sentiment Survey (not our survey) moved above the 3 to 1
bulls to bears ratio again last week, which can be a concern. Except
for the 4 to 1 ratio in December, we hadn't seen a 3 to 1 ratio since the
first week in 2006. But the ratios were very volatile back then as we
saw high ratios between 2 to 1 and 4 to 1 regularly, and in between very low
ratios below 1 to 1, and it all happened without a ton of movement in the
S&P 500 itself.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
So again, the
indicators are not really giving us much help. They have been telling
us to sell for a couple of weeks now and although the S&P has been down 4 of
the last 5 days, we aren't really getting and serious pullback action.
Right now it is the trend that is winning the battle.
The 3 to 1 bulls (56%) to bears (18%) ratio in the AAII Survey equates to
76% (56 of the 74 total) of those picking a side (as opposed to the 26% who
said they were neutral or unsure). Historically, a 70% ratio has led
to weakness over the next 3-weeks during earnings season, which kicked off
yesterday with Alcoa.
Courtesy of www.sentimentrader.com
The charts are in an uptrend. The indicators are bearish, but they
have not been very helpful to us over the last several weeks. And we
are entering earnings season. Even if we had unlimited interfund
transfers again, I'm not sure I would be able to tell you where I would want
to put my money. It is that murky. We're due for a pullback, but
being on the sidelines is fighting the trend. Good luck whatever you
decide.
Thanks for reading! We'll see you tomorrow.
Tom Crowley
Click here to discuss today's Market Commentary
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