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How much more pressure can the
market take?
It was another light volume rally for stocks yesterday as the sellers seemed
to have taken an early vacation. We saw modest gains across the board
and the Dow picked up 26-points on the day.
For the
TSP, the C-fund was up 0.35% on Wednesday, the S-fund gained 0.19%, the I-fund
added 0.03%, and the F-fund (bonds) lost 0.06%.
The S&P 500 has closed positive in 11 of the last 12 trading days, and 14 of the
last 16. That middle trend line below has been acting like a magnet
for the last three weeks.
If you remember on
December 13 we talked about possibly seeing a peak when the
S&P 500 becomes 125-points above the 200-day EMA. At the time it was
104-points above it, and since both are moving higher, it is a moving
target, but yesterday we saw a close 114-points above the 200-day.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
My prediction was that we could see 1275 on the S&P about the same time the
200-day EMA hits 1150. 1275 happened to coincide with another
indicator's target so I stuck with that. With the S&P now trading at
1259, is it worth sticking around for another 16-points?
While I love the trend's
strong momentum, these next three indicators are ones that we watch closely
and have become a major
concern.
I mentioned
the
other day that the 1.40 level on this smart money OEX put/call ratio
would be a
queue for me to step aside for a while.
Here we are.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
We also mentioned that this 50-point difference in the smart money / dumb
money is a rare event and should be taken as a warning.
Chart provided courtesy of www.sentimentrader.com
And after two prior
weeks of close calls, this week's
TSP Talk Sentiment Survey System finally gave a definitive sell signals after the bulls (64%) to bears
(20%) ratio hit 3.20 to 1 - well above the 2.0 to 1 sell signal ratio.
Other
than the strong trend, I don't see very many positive reasons for the market
to continue higher, except for the positive seasonality for next week...
Chart provided courtesy of www.sentimentrader.com
And possibly the dollar looking like it may be ready to break down out of a
bearish rising wedge, which could benefit stock prices.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
It is going to take some guts to stay in stocks for another week, and if you
live by the rule that "the trend is your friend" you may be able to hold
out.
Thanks for reading! We won't be back until Monday so Merry Christmas
everyone! I hope you all get some time off to enjoy yourself this
weekend.
Tom Crowley
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