Market Comments

November 16, 2007


Fund share prices as of: 11/16/07
Fund - G Fund F Fund C Fund S Fund I Fund
12.21 11.80 16.32 19.72 24.69
$  Change - +0.00 +0.05 -0.22 -0.22 -0.36
% Chg day - +0.00% +0.43% -1.33% -1.10% -1.44%
% Chg 2007 - +4.27% +5.92% +4.02% +5.12% +11.12%
  L2040 L2030 L2020 L2010 L Income
18.07 17.25 16.51 15.33 13.38
$  Change - -0.19 -0.16 -0.12 -0.07 -0.03
% Chg day - -1.04% -0.92% -0.72% -0.45% -0.22%
% Chg 2007 - +6.36% +6.15% +5.97% +5.51% +4.86%


Today's Comments (Short Term Outlook)                             Printer friendly
More selling - but holding so far

Stocks could not hang on once again yesterday and the selling intensified as the day went on.  That's the bad news.

The good news is that Monday's low is still holding up.  The technical picture is not looking good, but as long as the S&P 500 can stay above 1435 to 1440 area, we may have the makings of a playable rally.

 
                                  Chart provided courtesy of www.decisionpoint.com
       
A playable rally just means a rally within a down trend.  The indices are oversold and the sentiment surveys are quite bearish.  The "dumb money" is now below that 40% level and the "smart money" is above that 60% level, which together is an intermediate buy signal from sentimentrader.com.  These figures come from a series of several sentiment type indicators on their site.
                                  Chart provided courtesy of www.sentimentrader.com


Speaking of sentimentrader.com, Jason Goepfert gives us an ominous outlook for today.  Thursday's sell-off is historically bad news for Friday during options expiration week:

"Option expiration is tomorrow, and according to Jason Roney of minyanville.com (which I've verified), if the Thursday prior to expiration does not trade in positive territory all day, and it closes below the open, then there is often downside follow-through the next day.

 

I can find six prior instances of this happening, and Friday closed in negative territory all six times, by an average of -4.6%.  That's a breathtakingly bad return, but is influenced by September 2001.  Even taking out that occurrence, the average return was still horrible at -3.2%."

- Jason Goepfert

Ouch!  That's sounds pretty bad, but it may just be the wash out / fear / panic-type selling we need to see a turnaround in the market.  We have not seen any capitulation yet, and this could help.  But again, any rally may only be temporary.  During bear markets and corrections, you can see big rallies that can be played to the upside if you are nimble.  The S&P 500 can actually move up to the 1525 area and still be in the downtrend.  That would be a 5% gain from where it is now.  Before we can consider the downtrend over, we'd want to see a higher high and a higher low.  Until then, stay defensive.  That doesn't mean to you can't make some short-term attempts at buying because we are due for a relief rally. 
 
This week's TSP Talk Sentiment Survey came in at a tie, 43% said they were bullish and 43% said they were bearish.  That 1 to 1 ratio keeps the system on a buy signal for all of next week. 

The AAII Investor Sentiment Survey was more bearish as the ratio is still well below 1 to 1.  That is usually a sign that we can expect to see at least some short-term relief.


                                 Chart provided courtesy of www.decisionpoint.com

With the historically positive bias of Thanksgiving week coming up, we have the ingredients in place for a welcomed relief rally.  

That's all for today.  Enjoy your weekend.
 

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