Finally - some late
buying
As poorly as the market seems to be behaving lately, the S&P 500
actually managed a modest 0.35% gain for the week last week.
But it took a sharp options expiration influenced rally in the final
20 minutes of Friday's trading to get there.
That late rally was quite refreshing as we have been used to late
selling by what we consider the "smart money" the last couple of
weeks. Again, this could have easily been caused by the
options expiration, but the bulls will take it.
This could be a very tricky week for
the market. We have seasonally positive trading days of the day prior to,
and and the day following, Thanksgiving Day. But the days before and after
those days are average to below average at best.
Chart provided courtesy of
www.sentimentrader.com
We have four different
systems/services on this site and we have very little agreement between them
this week.
We have an S&P 500 that is quite oversold yet precariously hanging above a weak
support area, that if broken, could open the flood gates to mass selling.
But if it holds we could be at a very good short-term buying opportunity.
If we do see a rally, I can see the S&P being able to move all the way up to
that upper resistance area, which is currently near 1525. That would be
almost 5% above where we are now. But if support breaks, we could get
something similar to what we saw in August where the floor fell out from
underneath the market.
I remember that well as I was safely on the sidelines in the F-fund, but the Fed
ruined my chance of buying low as that was the day the they stepped in with an
emergency rate cut, and the market rallied over 5% in a day and a half, ruining
any chance we had a to do anything in our TSP accounts. That hurt.
And if support breaks again, it's possible the floor will fall out from
underneath the market again, but the Fed may not step in this time.
Chart provided courtesy of
www.decisionpoint.com
With the major indices significantly off of their highs, and most of
overbought/oversold indicators quite oversold, it seems like buying here is a
no-brainer, but looking at the 10-day moving average of the ARMS Index, it is
closer to a sell signal than a buy signal. This is an unusual reading for
a market that has been so beaten down. We would usually be looking to buy
when we see a 1.30 to 1.50 reading, not 0.93.
 
Chart provided courtesy of
www.decisionpoint.com
The
TSP Talk Sentiment Survey system remains on a buy signal this week after the
1 to 1, bulls (43%), bears (43%) ratio.
So we have some reasons to be looking to buy, and others that tell us to stay
defensive. This is where it gets tough as a trader. Being on the
wrong side of the market during a volatile period can be hazardous to your
account. Buy and hold investors are always vulnerable to market downturns,
but at least they are in for all of the rallies. The risk to active
traders is being in the stock funds during down days, and being out on up days.
Of course it could also go the other way when you are out of the stock funds on
bad days and in on good days. That's when you are rewarded for all of your
efforts. That's what it's all about.
That's all for today. See you tomorrow.
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