Today's Comments (Short Term Outlook)                             Printer friendly

Can we trust it? The market rallied strongly yesterday again leaving the S&P 500 just under the old support line - which has now turned into resistance.  Can we trust this rally to follow through, or are we setting up for another disappointment? The market was seeing enough pessimism from the dumb money, and optimism from the smart money for us to expect at least a relief rally, and yesterday could have been the start.  It is options expiration week so I won't be surprised if we see our first positive week since December's options expiration week.  But, it may not be a straight shot.  I'm looking at other market bottoms, whether short or long term in nature.  I've circled March of last year's low and marked it "A", and two reversal bottoms marked "B".  When a bottom is formed by a slow move higher, ala the "A" situation, there can be one last swift move down, just to scare us.  The bottoms marked "B" tend to be very quick reversals that follow through strongly to the upside.                                      Chart provided courtesy of www.decisionpoint.com  The fact that we have not jumped off the low made last week, but rather crawled off, makes me suspicious that we could see another swoop downward toward that low which will scare out those who are a little uncertain.  Then we could see a more forceful rally.  Just a theory.  I am still not convinced this market is ready for the bull market to continue, but if the S&P 500 can manage to close over the long-term support line, we could easily see a move to the upper resistance line currently near 1465, but that resistance is falling every day.  If that happens we could see a move in the S&P from a low of 1375 all the way up to 1465.  That will be quite a move and with that kind of volatility, it will be tough to stick to any kind of preconceived plan.  Of course the fact that I am predicting this is a guarantee that it won't happen. I'm going to cut it short today.  Griffin posted a new Griffin Brief for us yesterday afternoon.  See you tomorrow. Have questions?  Visit our message board for answers.  Would you like to be on our email alert list?  We will send you an email when there is a change to our asset allocation or market outlook.  Your email address will never be given out.  Read our privacy policy.  By signing up you agree to the TSP Talk Terms of Service.  More details below **. Are you bullish or bearish?  Join the Weekly Sentiment Survey. Like what you're reading?  Tell a Friend about us.