Today's Comments (Short Term Outlook)                             Printer friendly

Tug-of-war After Friday's pre-holiday early weakness and strong close, Tuesday's post-holiday action was a mirrored opposite.  Stocks shot out of the gate fast and furiously to the upside yesterday, as we expected based on Monday night's futures prices, but ran out of steam quickly, and gave back those gains. The S&P 500 closed within 8 cents (0.08 points) of Thursday's close.  That's three closes within 1.13 points.  The triangle / pennant formation is still intact, the apex is getting tighter, and there's several tight areas of support and resistance above and below.  There will be a breakout very soon, and it could be today based on the CPI and/or the FOMC meeting minutes being released.                                     Chart provided courtesy of www.decisionpoint.com  The CPI (consumer price index) will be released at 8:30 AM ET and estimates are for 0.30% with a core rate of 0.20%.  The FOMC meeting minutes will be released at 2:00 PM ET.  I'm assuming we'll see that breakout based on one of both of these.  Which way, I don't know.  I'm assuming down based on the current trend. The bond market surprised me yesterday with yields rising sharply again (prices moved down).  I had thought the support would give the AGG at least a temporary bounce.  Now we are about four weeks from the peak made in January.  That's about as long as the prior two pullbacks lasted.  As I hinted yesterday, I used this weakness to go ahead and buy into the F-fund.  The good news was I was able to buy at a low price with yesterday's 0.58% drop.  The bad news is that the first level of support has now failed.  There is still a drop dead support area near 101.  If the AGG can't hold that, I will abandon the trade.                                     Chart provided courtesy of www.decisionpoint.com  We talked about this a few days ago, but the nice thing about this transfer (going from the G fund to the F fund), which was my first in February, is that I can now use my second transfer of the month to go into either the stock funds if the opportunity arises, or back into the G fund.  If I do go into the stock funds, I can then use a 3rd transfer to move back to the G fund if needed.  This is playing by the proposed rule changes - which are not official by the way - but I don't want to push the envelope.  I am literally putting my money where my mouth is as I am betting that stocks still have some more work to do on the downside - even if it's just a test of January's lows. I don't normally tell my allocation out of respect for the subscribers to the premium services, because I follow their recommendations when I can, but right now the systems are all over place - some in stocks, some out.  Tough market.  That's all for today.  See you back here 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.