Don't blink or you might miss it.  The last two sharp sell-offs have been bought up rather quickly, and while we may have to be concerned that we saw two major sell-offs in the last couple of weeks - with the second making a lower low, it appears buyers are still willing to step up and buy the dips.

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

That lower low got my attention so I wanted to take a look at some of the other major indices...

The Dow Transportation Index is still showing a solid uptrend, with a higher high, and a higher low.  Good.

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

The Nasdaq also looks OK - higher high, and a slightly higher low.   
 
                        

                        

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

The Russell 2000 small cap index looks good with the uptrend still very much intact, but it has come a long way in a short amount of time, and is now 100-points, or 17% above the 200-day EMA.  If that trendline breaks, the pullback could b quite sharp.
 
                        
                       Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

So, there are some minor red flags in the index charts but nothing too serious at the moment.  One bright spot if you are worried about the recent selling is that it has taken the ARMS Index down into the 1.50+ buy zone:


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

If there is a concern, it is this week's sentiment survey.  After the 1.18 to 1 bulls to bears ratio last week, giving the system a buy signal, this week's TSP Talk Sentiment Survey came it at 64% bulls, 25% bears for a 2.56 to bulls to bears ratio sending the system back into a sell signal for next week. 

                              

Yesterday's big rally obviously had a big influence on our readers, and while the system's signals don't always give us instant gratification, it does tell us that we may be getting too complacent during these rallies, particularly after two sharp sell-offs.  One of these days the market won't bounce back right away after a sell-off and it will be interesting to see the sentiment of investors at that point.   

Thanks for reading.  Have a great weekend!

Tom Crowley