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

Volume remains light, but the bulls can't have everything.  The MACD still shows an obvious  negative divergence, and there is resistance just above at the June high. 

The chart of the Dow Transports illustrates how a needed pullback can manifest, while keeping the bull run alive.  That little double top in October last year looks similar to the double top we are seeing now.  There was about a week of chopping around at the double top before the pullback began.  A nice stiff pullback down to the 200-day EMA would be healthy and very welcomed by me as I am not in the mood to buy at this overbought level.  It may be too much to ask for, but it is certainly not out of the question.                   
                         
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Here is the Rydex Cash Flow Ratio chart that I had posted a few times last month after it hit levels not seen in over 10 years.  It was one of the reasons I turned bullish for short-term trade back then, although I did not take full advantage of what this indicator was apparantly really trying to tell us - which was "a big rally is coming!"  Had I know I would have played if differently.

You can see that this indicator is well off of the July lows having shot nearly straight up over the last couple of weeks.  That means the "dumb money" is now buying bullish funds and getting out of cash at a furious rate.  Kind of the opposite of panic selling.  Panic buying, perhaps?

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

The 0.86 level is nothing special.  If anything it is still on the overly defensive side (which is generally bullish for stocks) but the sharp increase is a concern because anytime a group of people all do the same thing, which in this case is dumping a bunch of cash into stock funds this quickly, the market tends to throw them a curve to get them leaning the wrong way again. 

Tomorrow is the release of the July jobs report.  Today is the day to make any transfer in your TSP account to take affect on Friday.  I don't know whether that would be to buy or sell, but it is your last chance to act beforehand.  Good luck, whatever you decide.

Thanks for reading!  We'll see you back here tomorrow.

Tom Crowley