New high in stocks, yields break

Stocks moved higher on Friday as the jobs report gave investors a bit of a mixed bag, but it was another opportunity for the dip buyers to do their thing. 

The number of jobs created was well below estimates, but the unemployment dropped to 9.0%.  The initial reaction was a morning sell-off, but once again buyers stepped up and the Dow closed up 30-points on the day.

                                
For the TSP, the C-fund gained 0.29% on Friday, the S-fund was up 0.26%, the I-fund was added 0.03%, and the F-fund (bonds) lost 0.39%.  For more on the weekly and monthly returns, please see our TSP Weekly Wrap-up.  

The S&P 500 chart just keeps moving toward the northeast end of the chart and closed at another multi-year high.  That sounds like the definition of a bull market.
                         
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

With the S&P 500 and other major indices at or near those multi-year highs, it is surprising to see the bearishness, or lack of extreme bullishness from investors, although the various surveys are somewhat mixed.

Our TSP Talk Sentiment Survey came in at 38% bullish, 45% bearish for a bulls to bears ratio of  0.84 to 1.  That is a buy signal (anything 1.25 to 1 or lower is a buy in a bull market).  So, the Sentiment Survey System's allocation will remain 100% S-Fund for this week.

Also surprising is the fact the the NYSE is not very overbought.  As a matter of fact we have not not seen an extreme overbought reading, nor an extreme oversold reading, since November.  This market is just chugging along with few signs of trouble - at least from a technical analysis perspective.  If there is trouble with the fundamentals I would expect the chart to tell us.
                         
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Of course the complacency coming from me should be a warning sign in itself. 

The yield of the 10-year T-Note broke to the upside of the bull flag late last week and unless it can move back into the flag in the next day or so, this is a very bearish sign for bond and the F-fund for at least the intermediate-term. 

                        
                        Charts provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The unrest in Egypt is still a concern, but as we talked about last week, news driven pullbacks in strong bull markets are generally good buying opportunities, and the fact that the news out of the Middle East caused just a one-day pullback is testimony to how strong this market is.  Why fight it?

I am writing this during the Super Bowl half-time show so I'll wrap it up so I can back to the game in time. 

Thanks for reading!  We'll see you tomorrow.

Tom Crowley