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They're buying the dips
Stocks got off to a slow start yesterday as the bears tried to
follow-through on Tuesday's losses, but the dip buyers stepped up pretty
quickly and took the Dow to a new closing high.
For the TSP,
the
S-fund led the way with a gain of 1.15%, the C-fund was next at +0.84%,
and the I-fund picked up 0.2%. Bonds
fell and the
F-fund
lost 0.22%.
The
S&P 500 moved back above the rising wedge, which has to be considered
bullish, although there is no denying that this market is getting
overbought.
Chart provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
The overbought/oversold
indicator has been steadily rising and as if on queue, managed to bounce
off of that rising trend in the indicator. The +500 area has been
a bit of a problem for the short-term action and we are now seeing a
reading of +430.
Chart provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
I also noted the longer-term
resistance line of the NYSE above, and you can see that the index is
closing in on it. It will be an interesting test if and when it
gets there. The declining line is currently at about 7750 and the
NYSE is at 7430. We will get that test in just 320-points (or less
since the resistance is declining). 320-points would be a gain of
4.3% from where we are now. I can go along with that. This
market will eventually need a longer-term break, but momentum has been
so strong that it appears short-term pullbacks are not going to be
enough to stop it.
The NYSE ARMS Index has also been trending higher, possibly on a journey
up toward the 0.80 level after the 1.50 buy signal in early December.
It has been a choppy move up, but the stock market has been coming along
for the ride.
Chart provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
Monday is Martin Luther King Day and the market has shown a strong
tendency to climb in the two days leading up to the holiday, but the
week after has been somewhat of a disappointment.
Chart provided courtesy of www.sentimentrader.com
Next week
also happens to be a post-options expiration week, which are generally
weaker than a random week, so that might explain the historical weakness
after this holiday.
Buyers obviously stepped up to the plate yesterday. One rule of a
strong bull market is to be a buyer after 2 to 3 down days, but the
momentum has been so strong that the market did not give investors even
two full days to jump in.
Being that we have this strong two day holiday bias, and being that it
appeared early on yesterday that we'd be getting a 2nd down day in a
bull market, I decided to use one of my transfers to be a buyer.
To my disappointment, the market rallied in the afternoon (That darn TSP
deadline) and I missed a chance to pick up those gains. I'm hoping
for a couple more days of gains, but this will be a quick trade for me
as I am still concerned about the market being overbought, and investors
being overly bullish.
Thanks for reading. We'll see you
back here tomorrow.
Tom Crowley
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