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| Today's Commentary (Short Term Outlook) |
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Extreme readings have
eased For the third day in a row, stocks were not able to hold onto early gains. This is a change from the many strong closes we've had over the last several weeks. The Dow closed up 9-points on Friday, but had opened up much higher.  For the TSP funds on Friday, the C-fund added 0.07%, the S-fund slipped 0.03%, and the I-fund rallied 1.04%, as the dollar was down 0.7%. Bonds were higher as the F-fund gained 0.19%. For more on last week's returns , please see our TSP Weekly Wrap-up. The S&P 500 remains firmly in an uptrend, and technically in very good position. The negatives at the moment are the weak closes which are creating the "kangaroo-tail" reversals. This could be telling us that a possible short-term pullback is due - and will be welcomed. There is fairly strong support at the 20-day EMA near 1150, where the January highs meets the rising trend line.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk I was getting concerned about the market but many of the indicators we follow are actually hanging in there. The NYSE overbought / oversold indicator is now basically neutral, well off of the extreme overbought reading we saw a couple of weeks ago.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Last week's TSP Talk Sentiment Survey came in much more bearish (bullish for stocks) than I might have imagined considering that the major indices are just off their 52-week highs. We saw a bulls (45% bulls) to bears (43%) of 1.05 to 1, which is actually a fresh buy signal for that system.  The AAII Investor Sentiment Survey confirmed it having similar results as our survey: It had a 0.91 to 1 bulls (32%) to bears (35%) ratio. It sounds like investors are expecting a pullback, and that could mean we won't get much of one at all. Either that or the dumb money is selling near the top, which would be rare. I am still concerned about geo-political and economic events that could spook the market, but it is difficult to plan for the unexpected. We know Greece is in trouble and their bailout is not etched in stone yet. At home we have employment, housing, and deficit concerns, but how, if, and when that will affect the stock market remains to be seen. The stock market tends to be one of the best forward looking indicators that our economy has and right now it is still pointing up. I have to believe that means that the news will remain positive, but if the market starts heading south, look for bad news to follow. Thanks for reading. We'll see you back here tomorrow! Tom Crowley |