Stocks fell all morning yesterday, then tried to rally most of the afternoon, but a late sell-off had the Dow closing down triple digits yet again.  We are getting so close to a do or die situation, that I'm changing my figurative yellow warning flags to orange. 

 

The TSP stock funds saw losses in the 1% to 1.2% area, while the F-fund was also down slight - which is interesting.  Investors did not run to bonds on the sell-off for some reason.

The S&P 500 was down 1.2% on the day and as you can see it is hanging on by a thread to support levels, after a brief intraday break.  If this bull market is going to resume, it is close to now or never.  

The AAII Investor's Sentiment Survey closed below the 1.00 bulls to bears ratio this week which, if we are in a bull market, is a time to be a buyer.  If this bull run is over and we're going to resume the longer term bear market, the 0.95 to 1 ratio isn't that severe.  Officially, with the S&P still trading above the 200-day EMA and the 50-day EMA holding above the 200-day EMA, we are still in a bull market - but we're starting to flirt with the alternative. 

Our TSP Talk Sentiment Survey came in at 41% bulls and 46% bears for a 0.89 to ratio.  That is a buy signal in a bull market, but neutral in a bear market.  Again, officially we're in a bull market.

This was the second consecutive weekly buy signal from this little system.  During the 2009 bull market we saw consecutive weekly buy signals three other times.  Each of those three previous times triggered a strong two week rally.

This is the final trading day in January.  If the old axiom of, as goes January, so goes the year, is going to hold up this year, the S&P 500 better have a good day today.  The S&P 500 enters the day down 2.74%.  If that doesn't work, we'll have to root for the NFC team (Saints) to win the Super Bowl next month. 

"The Super Bowl Theory holds that a victory by an NFC team or an original (pre-1970 merger) NFL team --the Browns, Colts, or Steelers-- point to a bullish market the following year. An AFC victory signals a bearish drop in the market. The Super Bowl Theory has accurately forecasted the stock market 31 times."

Thanks for reading.  Have a great weekend! 

Tom Crowley

If anyone is interested, I set up a fundraiser at MercyCorps for the victims of the Haiti earthquake.  I always feel so helpless in times like these so rather than just giving a few bucks, I thought I would do something a little more by providing a vehicle for our readers to help also.  It looks like a terrible situation, so if we can spare a couple of bucks, it will add up.  It is a quick and painless process.  Thanks!

                                  

Update 01/24/10:
Despite the obstacles, our response team is getting aid to earthquake survivors in Haiti -- thanks to your financial support.

Here's the latest news from our field teams:

• At Port-au-Prince's overwhelmed General Hospital we're restocking the kitchen with enough staple foods -- flour, oil, salt and more -- to feed patients, staff and family members for two weeks. We're also working with UNICEF to deliver hygiene kits, nutritional supplements and toys to mothers and children.
   
• We're delivering high-energy biscuits to 600 patients and family members at a second beleaguered hospital.
   
• We're pressing forward with plans to improve water supply in heavily affected areas of town, train caregivers on how to treat quake-related trauma in kids, and pay residents to clear rubble from neighborhoods.

From MercyCorps: Over the last five years, we've allocated more than 89% of our resources directly to programs. America's premier charity evaluator gives Mercy Corps four stars in organizational efficiency. Click here to learn more.

Mercy Corps is a 501(c)3 charity. Your gift is tax-deductible as allowed by U.S. law.