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Bears Run Over By Runaway Train

coolhand — Fri, 03 Feb 2012 23:10:22 GMT

When it rains it pours and if I was a bear I'd be quite dejected by now.

Today's buying frenzy was touched off by an unemployment rate that fell to 8.3% in January from 8.5% the previous month. That was an unexpected reading for most economists. In addition, nonfarm payrolls spiked by 243,000, which was well above estimates calling for 155,000. Private payrolls also rose, in this case by 257,000. That too was well above estimates as economists were looking for a number closer to 168,000.

The ISM Service Index was also up from 52.6 in December to a reading of 56.8 for January. It was yet another data pont that exceeded economists estimates.

Factory orders for December were up 1.1%, but in this case that was below estimates looking for a 1.5% increase.

Here's today's charts:

Beginning another up leg? Both signals remain on buys.

NAHL and NYHL are also moving higher and are in buy conditions.

TRIN and TRINQ are now both on buys. And collectively they are not suggesting an overbought market.

BPCOMPQ's trajectory remains the same. Up and on a buy.

So the Seven Sentinels are all sporting buy signals, which keeps the system in an intermediate term buy condition.

As overbought as this market may seem, these charts suggest we're heading higher still. I know it won't last forever, but when the train has this much momentum you don't want to step in front of it. Nuff said.

Stop by Sunday evening when I'll have the tracker charts posted for next week. See you then.

Sensing the frustration

tsptalk — Fri, 03 Feb 2012 03:56:37 GMT

02/03/12

The Dow closed down 11-points yesterday but stocks were mostly higher on the day as the S&P 500, Nasdaq, small caps, and I-fund stocks all posted modest gains.

For the TSP, the C-fund gained 0.12% yesterday, the S-fund was up 0.35%, the I-fund made 0.25%, and the F-fund (bonds) picked up 0.08%.

I am often asked if it is difficult to come up with something to talk about every day and almost invariably the answer is, no. There always seems to be something going on that is worth writing about, but I have to admit this type of market does not make it easy.

The rally has been relentless and I can hear the frustration from some of our message board members who are missing out. They want to know if they should just buy here because they are sick of missing out on the gains.

The market loves this game. It wants nothing more than to get you to give up and buy the runaway market, just in time to trap you and then pull back.

Our Sentiment Survey shows me that, despite the relentless gains, many of us are on the sidelines expected a pullback. The bulls (50%) to bears (42%) ratio of 1.19 to 1 is again low enough to trigger a fresh buy signal. That's 3 buy signals in a row and 4 in the last 5 weeks. I am guessing that we won't see any significant sell-off until more of us give up waiting and that ratio gets much closer to 2 to 1.

The ironic part is that since the bulls to bear ratio is in our buy area, the market could still go higher. I hate to chase any market but when the bearish percentage is this high, and the ratio is this low, that's a pretty good indication that there is still some fuel for this rally. After all, the bears are the fuel to a market rally as they are the one who are doing the buying now. The bulls have already dome their buying.

Anyway, here is the chart. Nothing much has changed...

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

Estimates for today's jobs report are still for a gain of 155,000 jobs and an unemployment rate of 8.5%

Here are some stats from our friends at www.sentimentrader.com:

The last 8 Fridays when the Nonfarm Payroll report was released have opened mixed, but all closed lower than the day before.

If you bought at the open on every Nonfarm Payroll day and sold at the close, you wouldn't have had a +1% gain since way back in September 2009. The last 28 have all shown either a loss or small gain.

There have been 14 times the S&P was sitting at a six-month high the day before a Nonfarm Payroll report since 1997.

There was a modestly positive bias the day of and after the report, with the S&P up 63% of the time. For the rest of the month, it was positive 52% of the time, with an average return of -0.7%, average drawdown of -2.2% and average maximum gain of +2.0%. Pretty mixed.

There were only two times it happened on the February release, in 2007 and 2011. Both times, stocks gravitated modestly higher for the next couple of weeks, then started to crack near the end of the month, erasing the entire year's gain up to that point.

Thanks for reading! Have a great weekend!

Tom Crowley

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

Sentiment Survey Results...

tsptalk — Fri, 03 Feb 2012 01:19:10 GMT

TSP Talk Sentiment Survey results for the week of 2/06/12- 2/10/12

Buy: The TSP Talk Sentiment Survey came in at 50% bulls, 42% bears, for a bulls to bears ratio of 1.19 to 1. That is another fresh buy signal in a bull market which means the system will remain 100% S Fund for the week of 2/06/12 - 2/10/12.

Bull market rules are in affect the week of 1/09/12:

See latest survey results

To discuss or comment on the Sentiment Survey, go to Sentiment Survey Talk

The legal stuff: This system is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We actively trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

Post Rally Action

coolhand — Thu, 02 Feb 2012 23:36:41 GMT

You've been seeing how the market has been chopping around, often closing with mixed results before popping to the upside the past few weeks. Well, that's still the trend. After yesterday's pop, which was preceded by choppy, mixed action, the market has settled back into a largely sideways pattern. One thing to recognize however, is how much stronger the Wilshire 4500 (S fund) has been relative to the S&P 500 (C fund). As of yesterday's close the Wilshire 4500 is up 9.71% not counting today's modest gains, while the S&P 500 is up 5.45%. That's a pretty good spread. The I fund has posted gains of 7.34%.

Of note today, Fed Chairman Bernanke was providing testimony to the House of Representatives Budget Committee. He didn't reveal anything new and continued to portray the market as sluggish and still susceptible to shock, but overall felt the economic picture at home and in the EU was improving.

Early on today, the latest initial jobless claims total was released and it showed claims had fallen by 12,000 to 367,000. This was less than economists had forecast, which is a positive. Also released, fourth quarter productivity was up 0.7%, which was in line with estimates. In that report however, it was noted that labor was up 1.2% and that was almost double estimates.

Tomorrow we'll get the nonfarm payrolls data, which always has the potential to be a market mover. Given yesterday's ADP Employment Change fell short of estimates, the nonfarm payrolls data may do likewise.

Here's today's charts:

NAMO remains on a buy, while NYMO flipped to a sell.

NAHL and NYHL are on a buy and sell respectively.

TRIN and TRINQ remain on buys.

BPCOMPQ continues to track along that upper bollinger band as it has for weeks now. It remains on a buy.

So the Seven Sentinels are mixed, but the system remains in a buy status.

I am liking the relatively low volatility this market is showing. It's exactly the kind of environment the Seven Sentinels do best in. Unfortunately, I have been on the sidelines in my TSP account for some time now and that account isn't enjoying these gains, but my ROTHs have been fully exposed to the market throughout.

I don't know how long we can hope to see a low volatility environment. The longer, the better, but there is still a lot of uncertainty out there and that's what keeps me somewhat tentative. Obviously, I am hardly alone as many traders and investors are sitting on the sidelines too. But that's why I do not employ the same strategy in each of my accounts, because you can never be absolutely sure how the market will trade.

Meet the new month...

tsptalk — Thu, 02 Feb 2012 03:00:50 GMT

02/02/12

Same as the old month. February starts off with a bang as we saw the Dow up over 150-points during the first hour of trading in the new month. The Dow and S&P did lose some steam late in the day finishing up < 1%, but small caps and the international stocks held onto big gains.

For the TSP, the C-fund gained 0.91% yesterday, the S-fund jumped 1.97%, the I-fund was up 1.89%, and the F-fund (bonds) was down 0.13%.On Monday the narrow ascending trading channel broke (red), but the S&P 500 is still climbing along the the bottom of the old support line. It came close yesterday, to making a new high above last week's high, but as we said the rally lost some steam late in the day and closed back below the new resistance line.

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

The 20-day EMA held on the first test, a positive sign in a bull market because that can hold for months as we talked about yesterday, but the S&P has not yet tested the longer-term support line the way the Dow Transportation Index did last week.

The Dow Transports, which is the leading index, tested the 20-day EMA 7 days ago where the S&P tested it 3 days ago. Comparing the two charts and we can see that the S&P 500 remains a few days behind, and during its lead, the Transports have basically moved sideways and may be ready for another test of the 20-day EMA and the longer-term support line.

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

After the first couple of days of February, the seasonality advantage drops off sharply and, except for some spotty positive days (using the blue dots, not the red / green bars), remains fairly weak throughout the month until the final day or two of the month.

Chart provided courtesy of www.sentimentrader.com

The blue dots are percentage of times positive where the red / green bars are average returns.

Of course this chart is an average of 61 years of data which includes bull markets and bear markets and this year we are clearly in a new bull market. But February comes after the seasonally strong November through January and the market does need take a break once in a while - even in a bull market. But in bull markets, pullbacks can be shallow and quick.

Tomorrow is the jobs report. Estimates are still for a gain of around 155,000 jobs and an 8.5% unemployment rate.

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

Tom Crowley

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

Another Pop

coolhand — Thu, 02 Feb 2012 02:06:57 GMT

I had mentioned yesterday that I expected this market to pop higher after the sideways, mixed action we had been seeing and sure enough it popped. The move was strong and sustained too.

Since I'm getting to the computer late tonight, I'm not going to post the charts, but every one of them is on a buy after today's action, which is hardly a surprise. And I have no reason to believe we can't go higher unless sentiment gets too bullish, and I don't think that's a problem yet either.

So the Seven Sentinels remain firmly in buy mode. I expect to post my usual blog with charts tomorrow. See you then.

Pop, drop, and a grind

tsptalk — Wed, 01 Feb 2012 04:49:50 GMT

02/01/12

Stocks opened sharply higher yesterday, but quickly sold off the rest of the morning. The indices found support just before noon where buyers slowly took them back toward the break even level by the close. The Dow lost 21-points.

For the TSP, the C-fund lost 0.04% yesterday, the S-fund dipped 0.02%, the I-fund was up 0.40%, and the F-fund (bonds) was up 0.15%.

Here are the final returns for January. A lot of green:

As we talked about, the old support of the narrow trading channel may now act as resistance, although if the S&P 500 continues to climb below that resistance line, the angle of incline would remain the same. The 20-day EMA held on its first test on Monday, and if we are in a bull market period that remains stable, these pullbacks to the 20-day EMA could be all we get for a while.

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

We've seen this type of action many times over the years. Here are a few examples from 1997 and 1998.

During that period we saw 3 extended rallies that did not fall below the 20-day EMA. If you missed the rally and waited for a pullback, you waited a long time. And while these rallies eventually broke, the sell-offs were not necessarily severe as some saw minor declines with mostly sideways consolidation before the next leg higher.

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

I don't know if that is what we'll get this time, but no one really knows what will happen. I like to look at the old charts to see if they give us any clues, and right now it looks like the bulls can ride this until the 20-day EMA breaks. If you're missing this rally, you can either be patient and wait it out, or you might decide to take a chance on the next pullback to the 20-day EMA.

We all get our new February IFT's starting today, but use them wisely. We only get one chance to buy each month. And speaking of IFT's, there has been some talk among the members of the message board looking into an effort to increase the IFT limit. We'll see how it goes.

A reminder that we have the jobs report on Friday. The briefing.com consensus estimate recently dropped from 170,000 non-farm payroll jobs, to 155,000.

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

Tom Crowley

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

Downside Remains Limited

coolhand — Wed, 01 Feb 2012 01:01:43 GMT

More choppy sideways action and another mixed close. Market chop has eventually given way to rallies during the month January, so I'm beginning to think this market is waiting for a catalyst to move higher once again. We could use some selling pressure, but buying opportunities have been largely pounced on during intraday trading. We TSPers have had little opportunity to get positioned lower; assuming one has any IFTs.

The Greece situation hasn't changed and Portugal is standing by for its time in the spotlight. Market participants seem to be largely bored by the whole thing, but don't be lulled into a sense of complacency. The time will probably come when the market will suddenly be concerned all over again.

Two data points were released today. The latest Chicago PMI came in at 60.2, which was lower than last month's 62.5 reading. Economists were looking for a number closer to 62.8. The Consumer Confidence Index for January dropped to 61.1 from December's 64.8 reading. That too was below estimates.

Let's take a look at the charts:

NAMO and NYMO remain on sells.

NAHL and NYHL managed to flip back to buys. Given the low volatility of these signals it's not surprising to see the reading flip back and forth.

TRIN remained on a sell (barely), while TRINQ flipped to a sell (barely). No help here.

BPCOMPQ continues to follow that upper bollinger band and remains on a buy.

So the signals remain mixed, which keeps the Seven Sentinels in a buy condition.

There are times when the market just isn't saying much and the past few days has been one of those times.

Tomorrow is the first of February and I'll be interested to see how many sidelined TSPers begin to take positions in the new month. I'm looking for a buying opportunity myself, but I'm not in a hurry to get invested and will exercise some patience in picking my spot.

Strong January is a good omen

tsptalk — Tue, 31 Jan 2012 04:31:21 GMT

01/31/12

Stocks gapped open lower yesterday but buyers are still lurking and buying the dips sending the indices higher and closing near their highs. The Dow, which was down 130-points during the first hour of trading, rallied to close down just 7-points.

For the TSP, the C-fund lost 0.25% yesterday, the S-fund fell 0.60%, the I-fund was down 0.98%, and the F-fund (bonds) was up 0.21%.

We saw the S&P 500 break below the narrow ascending trading channel yesterday, but this was the first time it closed below it. The index found support at the 20-day EMA before rebounding, but now we'll have to watch and see if the lower support line of that trading channel becomes resistance.

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

Taking a look at some of the short to longer term indicators, we can see that they are all pointing downward right now so yesterday's positive reversal may not have the market out of the woods yet.

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

There is still room on the downside if we look at the 50-and 200-day EMA's in the top chart, or the longer-term rising support line on the chart above, but investors may not get that lucky. There are a lot of folks who are sitting on the sidelines waiting for an opportunity to buy, and we know the market tends to do whatever it takes to make the most people wrong.

We know that our Sentiment Survey has remained on a buy signal because those polled are not getting overly bullish yet (47% bulls, 43% bears, 1.09 to ratio) despite the big rally over the last several weeks. That could mean that the rally has more legs - at least until we start seeing a numbers closer to a 2 to 1 ratio.

Barring a collapse today, the strong returns in January are a good omen for the year as you can see by the numbers.

Chart provided courtesy of www.sentimentrader.com

The yellow highlighted rows are presidential election years, which all finished in positive territory.

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

Tom Crowley

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

Market Closes Well Off Lows of the Day

coolhand — Mon, 30 Jan 2012 23:45:23 GMT

The market started out a bit ugly, but a strong bull market tends to shrug off negativity and today the dip buyers stepped back in to keep losses contained.

The situation across the pond (Greece and Portugal front and center) continues to spook markets to some extent as creditors and EU Pols keep applying pressure. I've been posting media reports about this situation in my account talk thread during the week, so I won't get into any details here.

There was only a couple data points released today. Personal income in December rose 0.5%, while personal spending was flat. Neither number was a surprise.

Let's get to the charts:

NAMO and NYMO both dipped today and do give the appearance that they may be poised to dip further still. I think there's a good chance in the short term that they will too, but I'm still of the opinion total downside will be limited. Both are now in sell conditions.

NAHL and NYHL both dipped today as well and also flipped to sells.

TRIN fell a bit today, but remained on a sell, while TRINQ flipped to buy. These signals suggest downward pressure may be limited.

BPCOMPQ continues to track along that upper bollinger band and remains on a buy.

So the signals are mixed, which keeps the Seven Sentinels in a buy condition.

I continue to believe higher prices are coming; short term downside pressure notwithstanding. Things could change, but I think sentiment will have to get more bulled up in many pockets before we might see an intermediate term leg to the downside.

More Sideways Action

RevShark — Mon, 30 Jan 2012 23:31:27 GMT

Spiking Portuguese debt yields, more sovereign debt downgrades after the bell last Friday and continued chatter about the building frustration over Greece’s continued inability to come to any agreement with its debtors were all cited as reasons for an ugly open today. As I’ve been saying, the fact that the market kept floating higher without much underlying support meant that market players would need to be on guard should we run into an air pocket. That happened this morning, but I’ve also been saying that the dip buyers would be a big determinant in how aggressive any profit-taking might be, and they once again behaved admirably.

After gapping lower to start the day, buyers stepped up to the plate just as the S&P 500 fell to the important 1300 level (which has acted as an important support/resistance line over the past year). They weren’t able to get the indices back above the flat-line, but we once again finished well off lows and despite a fair amount of intraday up-and-down over the past 8 trading sessions, we’ve barely budged on a closing basis. The question is if that’s allowed the market to work off enough of its overbought conditions to pave the way for another upleg or if it’s a sign that the troops are running out of steam. We’ll see, but for the time-being, this is the bulls’ game to lose, and until we see their dip-buying efforts thwarted, I’ll continue to lean towards the long-side of the ledger.

OhMyGov News

OhMyGov! — Mon, 30 Jan 2012 21:12:14 GMT

Government Agency to Offer Social Media Training

The question is how will the government use this information?

By Jack B. Winn

Imagine if your company offered to teach you how to use Twitter or FB, or create a Wiki. For twelve weeks. And you got credit for doing so.

Well, imagine no more.
According to NextGov, General Services Administration (GSA) is offering a twelve week course via its Web Manager University starting Feb. 7.

Tuition and fees are $299 for government officials. Classes take place at the GSA's headquarters in Washington, D.C.

The courses are expected to cover traditional social networks such as Facebook, but also niche websites such as Quora, DokuWiki, and platforms, such as, IdeasWalk and Web Storm.

In addition to lectures, the sessions will feature presentations by government officials and industry leaders, hands-on projects and other tasks as well.

But just as all agencies aren't created equal, so are their social media strategies. It is a point that isn't lost on the course instructor, Gadi Ben-Yehuda.

"The government is not monolithic," Ben-Yehuda told NextGov's Joseph Marks. "An agency like the State Department is about engagement. Another agency like the Justice Department is not about engagement per se, but enforcing rules. They have such widely divergent goals that their social media tools are going to be different."

Beh-Yehuda should know. As social media director of IBM's Center for Business in Government, his day job is thinking about the various ways government uses sites like Twitter and Facebook--to collect and share information, store data, communicate with the general public and make sure agencies perform their job in an efficient and timely fashion.

But participants won't just learn how to hit 'enter' on their Facebook profiles. The classes will be heavy in theory as well--from community formation and digital communication, to how a wiki module works.

What Ben-Yehuda can't teach his students is how their social media tools will be used by the people they interact with--or whether they'll be used responsibly at all. It's a very different world from the town halls and face-to-face meetings participants are used to--many of whom have never had to interact with social media at all, let alone in the office.

"If you stand up and talk in a real town-hall meeting you have to show your face." Ben Yehuda said. "After the meeting someone can confront you about what you said. And these are your neighbors, literally people you have to live with. In social media, you can hide behind a mask of anonymity and leave you snarky little comment and run away, and that pollutes the entire conversation."

Already the government has made a large footprint on the face of the internet--Facebook and Twitter included. The White House already has 4 million social media "fans" on Twitter and Facebook, and the State Department and the CIA already have their own wikis with names like Diplopedia, and Intellipedia.

The GSA also has a wiki as well--BetterBuy--although it has come under fire in the past for lax policing and configuration errors. According to Federal Computer Week, in 2011 auditors found a multitude of spam comments on the site. Web application security procedures were also not followed, leading to a compromising of users' personal information.

As Facebook and Twitter becomes more ubiquitous within government, the question is how will the government use this information? It is a question Ben-Yehuda hopes his students will be able to answer when they walk out of the classroom.

"More than anything, that's what I want people to start thinking about," He said. "asking, can we add a social layer to this program? Then if we add a social layer, what are the best tools to use? I want to get beyond talking about Facebook, Twitter and Flickr."

WebManagerUniversity is a joint project of the GSA's Office of Citizen Services and Innovative Technologies and the Federal Web Managers Council.

www.ohmygov.com

Big jobs and IPO week

tsptalk — Mon, 30 Jan 2012 03:20:53 GMT

01/30/12

The Dow lost 74-points on Friday after a weaker than expected GDP report, but the broader indices saw just minor losses. We have a big week on tap for the market so we may need to fasten our seatbelts.

For the TSP, the C-fund fell 0.15% yesterday, the S-fund gained 0.68%, the I-fund was down 0.67%, and the F-fund (bonds) was up 0.11%.

For the weekly and monthly TSP returns, please see our recent TSP Weekly Wrap-Up.

This week starts with a European Union leaders summit today, and ends with the January jobs report on Friday. In between we have a slew of earnings reports, additional economic reports, and Facebook could possibly be filing for its IPO, one of the most highly anticipated IPOs in years.

I don't know how many ways there are to say that the S&P 500 is a short-term rising trading channel, while facing some longer-term overhead resistance, and overextended indicators, but there - I said it again.

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

Here are the projections for the January jobs report, and you can tell by the wide disparity between the consensus estimates and the forecasts from briefing.com, there is a lot of room for a surprise in either direction. This should keep investors nervous this week leading up to Friday's report.

Facebook's IPO may get started this week so let's take a look at how the market fared after some of the other biggest IPO's in U.S. history.

Chart provided courtesy of www.sentimentrader.com

Clearly the bias after the first day is quite negative compared to random market action. This could be because either the market ran up leading into the anticipated large IPO, or because IPO's are more likely to be offered during a strong market environment setting up a sell the news reaction afterward.

The TSP Talk Sentiment Survey came in at 47% bulls, 43% bears, for a bulls to bears ratio of 1.09 to 1. That is bearish enough to be another fresh buy signal in a bull market which means the system will remain 100% S Fund for this week.

I normally have a little more to say on a Monday morning, but the fact that the market has been in such a tight trading range for so long makes it tough to add anything of interest that is new. With the busy schedule on the economic and earnings reports calendar and the pending big IPO, perhaps we'll have something more exciting to talk about the rest of the week.

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

Tom Crowley

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

Stocks Heading Higher?

coolhand — Sun, 29 Jan 2012 17:19:06 GMT

Last week, the Total Tracker showed that we (the herd) collectively had a total stock allocation of just 36.19%. That was the lowest total I had seen in the time I've been tracking this data. I had said that such a low allocation may indicate continued upward pressure on stock prices. Overall, that was the case too. This week, we pulled back a bit more. Can we expect the same results?

The Top 50 remained largely the same as last week, although there was some measure of profit taking in that group.

Here's the charts:

As you can see, the Top 50 remains firmly entrenched in the S fund. And that's been working (so has the I fund if you can time it).

The Total Tracker (the herd) has pulled back their stock allocation a bit more to begin the new week. They reduced their stock allocation by 2.12% to a total of 34.08%. It was already a very low levels last week, so a further reduction may be bullish.

I would like to think we are due for a pullback and there are reasons to support that view, but the market is showing quite a bit of resilience whenever selling pressure does present itself.

Our sentiment survey has been on a buy or hold (buy) now for the past three weeks and it's on a buy again for this coming week. The sentiment survey coupled with our very low stock exposure leads me to think the downside will remain limited. The Seven Sentinels remain in a buy condition too.

I know a few professional trading/investing services that have been warning their subscribers about 2012 for some time now. They are also sporting conservative positions, so our own sentiment survey is hardly alone in it's bearish (bullish) stance. That doesn't mean we can't get some measure of downside action, but I'm not so sure it would amount to anything significant given what I believe is an overall bearish picture. The Top 50 have been positioned perfectly (so far) for the month of January and there's a good chance that what's been working so far will continue to work for the time being.

One thing to watch. February arrives on Wednesday and with it fresh IFTs. Many of us have been sitting on the sidelines because we are out of IFTs. If this market continues its ascent, we could see stock allocations rise in the new month. That could elevate risk levels if that happens so we'll have to watch it carefully.

TSP Talk Weekly Wrap Up

tsptalk — Sat, 28 Jan 2012 19:26:07 GMT

Hate to see January go

Despite the S&P 500 being down 3 of the 5 days last week, the major indices all managed to close in positive territory for the week, with a strong showing from the small cap and international funds. The market was bolstered by the Fed�s reassurance of low interest rates through at least 2014, and left the possibility of a QE3 on the table.

For the TSP, the C-fund was up 0.10% on the week, the S-fund gained 1.87%, the I-fund made 1.65%, while the F-fund (bonds) added 0.61%, and the G-fund was up 0.03%.

For the month, the C-fund is now up 4.81%, the S-fund has gained 8.26%, the I-fund has made 5.98%, while the F-fund (bonds) is up 0.52%, and the G-fund had made 0.11%.

The S&P 500 has remained in a very tight ascending trading channel since the week prior to Christmas, so the trend traders and �buy and holders� have been rewarded handsomely. Market timers are having a little tougher time because this rally has gone on longer than many have expected, and the indicators have been overbought and extended for a couple of weeks now.

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

The smart money / dumb money confidence indicator from SentimenTrader.com, which is a compilation of many indicators, shows us just how bullish the dumb money has become, while the smart money has backed off.

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

Whenever we see this indicator hit 60 more or on one side, and 40 or less in the other, we have enough of a discrepancy to take note. With the dumb money currently at 67 and the smart money at 38, this can be considered a warning sign for the stock market, at least in the short-term.

February is historically a tougher month for stocks after coming off of the much stronger November through January period.

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

It will be tough saying good-bye to January.

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.

Tom Crowley
www.tsptalk.com
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The legal stuff: This information is for educational purposes only! This is not advice or are commendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.