TSP Fund share prices as of: 02/19/09
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Today's Comments (Short Term Outlook)
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Uh, Oh! The bleeding continued yesterday as the major indices lost another 1% to 1.5%, and that's four days in a row in negative territory. The Dow has now made a new low (below the November low) while the S&P 500 and Nasdaq are trying to hang on. The S&P 500 is looking over a precipice and I don't like the looks of things. That said, the market is very oversold and sentiment is very bearish, and we could be setting up for some kind of snap-back rally. The question is, how much damage can be done before it kicks in? I keep looking back at the September / October breakdown where I got burned trying to play a snap-back rally. Oh, I caught the rally perfectly. The problem is I also was caught in the waterfall that followed because I was greedy and stayed in too long. I didn't use the 2 to 3 day bear market rule. If the market is up 2 to 3 days in a bear market - take the money and run.   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Volume has been light meaning we haven't really seen a capitulation, but rather the selling has been fairly orderly. The VIX was actually down yesterday. A reversal is more likely to come on high volume so we probably have a little more downside to come. Perhaps this morning? It is an options expiration Friday and we can't always trust the action. If we do sell-off today, I can see Monday being a good day. If we rally today, Monday might be a bad day. That happened in both September and October, with one Friday being up (Sep), and the other down (Oct), and the Monday after reversed that action. The PMO indicator is showing another very ominous sell signal above, but the MACD, a trending indicator, still shows a positive divergence. The NYSE is clearly becoming oversold as the indicator is now about -850. That's the lowest reading since the November lows, where it hit -1500.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Looking at sentiment, the CBOE and Equity put/call ratios, which inexplicably to me had become overly bullish a week or two ago, have finally started pulling back as the market dropped this week. The indicators below are the 10-day moving averages. The daily readings were much lower yesterday so these moving averages should be moving down quickly in the coming days.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Sentiment in the surveys is also becoming quite bearish after some curious readings a couple of weeks ago. In the AAII Sentiment Survey, the bullish percentage was just 22% this week, the lowest since last March. The bearish percentage is 57%, one of the higher readings in the last year. And because of those two readings, the bulls to bears ratio of 0.36 to 1 is also one of the lowest in years.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Looking at the chart, these readings don't always mark THE bottom, but a short-term rally is usually close at hand when fear is this high. The TSP Talk Sentiment Survey came in at 27% bulls, 60% bears for a ratio of 0.45 to 1. Again, one of the lowest ratios we ever get. We have seen some very big weeks, both up and down, in the market the last few times we had readings below 0.50 to 1.  So, up or down, the odds are pretty high for a big week next week. Be careful. If you try to play a bounce, please don't get too excited if we do rally. Take some profits when you can. Sure, a double bottom successful test of the November low is a possibility, so even if you are out of the market if / when it happens, we should get several opportunities to buy. That's all for today. Thanks for reading. Have a great weekend! |