Stimuli

The market took a little break from last week's impressive bounce.  We had some highly anticipated stimuli waiting in the wings and now it's time for the market to react. 

The Fed raised interest rates 1/4 point as was anticipated but the comments were bit more hawkish than many expected, leaving the door open for more possible rate hikes.  Google's earnings disappointed after bell yesterday and is likely to put some pressure on tech stocks today.  And the President's State of the Union speech was delivered. 

The post Fed action was a day trader's dream and a TSP account holder's nightmare. 

       

Not that we could have done anything about it once the announcement was made, but the rally / selloff / rally / selloff action has got to have your head spinning as to what to do next.  While Google may set the tone for the open today, we have talked about the Fed's inflicted market action reversing itself in the days ahead.  But what was the action exactly?  The S&P 500 and Dow were down.  Small caps and international stocks did well.  Not a clear picture.

Oil is up near $68 a barrel and gold continues to make new highs.  Combine that with the Fed leaving that door open and it is not the perfect scenario for stocks.  They have been strong no doubt.  But they are going to be tested by the recent activity.

What a difference a few weeks make.  Not long ago the market was moving higher but the number of stocks making new 52-week highs was moving down.  I took this as a warning sign.  Since the start of the year however that has changed which tells us the rally was for real and had heavy participation.  That is certainly bullish.  But now we have gone a little too far the other way.


                                    Chart provided courtesy of www.decisionpoint.com

One day last week we saw over 450 new highs made on the NYSE.  That is not the sign of a weak market but it can be the sign of a market that needs a rest.  This number does not always spell trouble, but a temporary pause at this point is not uncommon. 

That plays into my theory that we could see a very strong 2006, but not until things cool down for a while.  I have expected a fair sized pause for some time now and my thinking is that the longer we go without that pause the less likely 2006 will be a big year.  That may sound contradictory, but I think that can be the difference between a good year and a great year. 

Site News:  RevShark heard your concerns and has volunteered to add a midweek update the TSP Timing Weekly Newsletter.  So the subscription will now include a supplemental bonus update each week.  That will now be 8 to 10 newsletters per monthly subscription.  This week's midweek update is now available.  See below for details for instructions on accessing the newsletters. 

That’s all for today.  Currently 100% G fund.  Thanks for reading.

RevShark's TSP Timing Newsletter is now available.  You can go to www.tspalk.com/members to sign up for the free trial.  TSP Timing is a weekly newsletter giving subscribers a target allocation determined by professional hedge fund manager James 'RevShark' DePorre.   Subscribers will navigate the financial seas along side the Rev while he manages millions of dollars for private investors.  Each week he will highlight TSP funds and a target allocation he believes will provide the best investment potential.  The newsletters will go over charts of each fund with a technical breakdown of each by RevShark.  The subscription now includes a midweek update.

Once the trial period is over, the regular subscription price will be $19.95/month which will include 4 to 5 weekly newsletters each month.  The newsletter will be in PDF format so you will need an Adobe Reader (Download it free here.)

Still have questions about the TSP Timing Newsletter?  See the Newsletter frequently asked questions.