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| Today's Commentary |
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Some concerns but trend remains up Yesterday the indices put in a similar "U" type pattern as the day before, although unlike Wednesday, the indices did not close at the highs yesterday.   We're still seeing some buying late in the day, but the sellers are doing their damage in morning. For the TSP, the C-fund was up 0.12% yesterday, the S-fund fell 0.22%, and the I-fund gained 1.14% as the dollar moved lower. The F-fund (bonds) added 0.19%. The trend in the S&P 500 remains up and the index continues to trade above the 20-day EMA and the rising trend line. If we don't see a new high in the next couple of days I will get concerned that the market does not have the strength to continue this powerful run it has been on.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The MACD Histogram is still showing a very strong negative divergence, and while this has not been a helpful tool in timing the market, it is not a positive sign for the market. The PMO indicator (above) has officially move to a sell signal as the PMO went below its 10-day moving average. The TSP Talk Sentiment Survey came in at 55% bulls, 35% bears for a 1.57 bulls to bears ratio. That is the second highest ratio (most bullish) since last May. That is not sell signal yet so the system remains 100% S-fund for next week, but other surveys are getting past the neutral area. The AAII Survey came in at 51% bulls and only 22% bears for a ratio of 2.32 to 1. 2.32 to 1 is the highest ratio and and 22% is the lowest percentage of bears since early 2007.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk And surprisingly, it's not such a bad thing...  As far as other indicators go, the NYSE overbought/oversold indicator is near -0-. That's a good thing in a bull market. The put / call ratios are not even close to showing any trouble yet. We are still in a bull market and even a little pull back or correction here would not stop that. It would actually take quite a sell off to have the 50-day EMA (1145) move back below the 200-day EMA (1112). Until that happens the market will "officially" remain in a bull market, which means dips can be bought. I have mentioned the strong tendencies for the market after the mid-term election - quite impressive. We are also heading into November and December; the two strongest months of the year historically as far as percentage of time being positive.  Chart provided courtesy of www.sentimentrader.com Some of my biggest mistakes in the market have been selling rallies too early, and buying too quickly after a market correction. Trends can last a lot longer than would seem reasonable, and that's one reason why I would like to see that rising trend break before being a seller - even though I am getting nervous. It could happen today. It could be weeks or months. Thanks for reading! Have a great weekend! Tom Crowley |
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