Today's Comments (Short Term Outlook)                             Printer friendly

This is what we wanted Things got quite ugly again on Tuesday and this morning may start out even worse.  But that may be just what we need to turn things around. Intel's weak sales guidance after the close yesterday sent the S&P 500 and Nasdaq futures even deeper into the red which, without any positive stimuli between now and (Tuesday night) and 9:30 AM ET, will set up a negative opening Wednesday morning.  There is talk of the Fed needing to step up and announce an emergency rate cut or other monetary stimulus, to avoid a meltdown.  They have a history of doing that sort of thing during an options expiration week, as it did in August. I look at a negative open as a positive for a short-term reversal, and the more negative the opening, the better.  Yesterday I talked about the S&P 500 needing to see 1375 before it rebounds up to the 1465 area.  We should respect what the market and indices are telling us, and a move below the lows made last week (marked "A" below) should remind that this is a downtrend and we should remain cautious and to preserve capital until the technical picture improves, but the market does not go straight up or straight down (usually).  It breathes in and out and the downside may be running out of air.  A big sell-off this morning should give us the capitulation that could stimulate a reversal.  I look for that some time this week, if not by the close today.  If we do see a sell-off into the abyss, the Fed is likely to step in.                                     Chart provided courtesy of www.decisionpoint.com  As worried as I am, I know that my state of mind should not be used as an indicator.  I decided to use yesterday's weakness to move my hypothetical long-term inactive account back to a 100% stock allocation after starting the year with 20% in the G fund, and 20% in the F fund.  With the futures so negative at this time, I may have jumped the gun by at least a day, but since this account makes only 2 or 3 changes per year, I am willing to buy low here and risk more downside because no one knows where the bottom will be.  Click here to see the change. Monday is Martin Luther King Jr. Day and here is the historical average results surrounding this holiday.   yesterday was day -4.  Thursday and Friday of this week are days -2 and -1, which look good, but next week - not so good.                              Chart provided courtesy of www.sentimentrader.com Buckle your seatbelts.  Today should be a wild ride.  We could see a major move in the indices.  Based on the futures, the initial move should be down, but don't rule out a mid-day reversal if it gets ugly enough early on.  What we don't want to see is a slow steady decline.  We want capitulation - a "give up" from the bulls. That's all for today.  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.