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Today's Commentary (Short Term
Outlook) |
Rest and resistance
After two big days for stocks, the market took a
little break yesterday as the Dow shed
26-points, while the S&P 500 lost 0.55%, and the
Nasdaq was up fractionally.
For the TSP stock funds; the C-fund slipped
0.51%, the S-fund lost 0.63%, and the I-fund
gave up 1.11% after a rally in the dollar. The
F-fund was down 0.18%.
The S&P 500 is back within the larger rising
trading channel but as we suspected, the first
attempt to move above the EMA's was
unsuccessful. If it is going to happen I am
guessing it would happen today for reasons we
talked about
yesterday, although Friday's jobs report
would seem to be the type of catalyst to get it
done.
Chart provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
I think the next three days are going to be very
telling for the market. If this recent
short-term rally turns out to be just a dead-cat
bounce, the technical picture is telling us that
we could see a negative downturn soon - if the
S&P 500 can not move above the EMA's pretty
quickly. On the other hand, if we are going to
see another leg higher, or at least a test of
the old highs, then the next three days will
push the S&P 500 above the EMA's.
We are off the most extreme oversold readings so
the market took a breather. I am anxious to see
the results of this weeks' AAII Investor
Sentiment Survey - as well as our survey - to
see if they have come off of their respective
overly bearish sentiments.
One of the sentiment indicators I use is the put
/ call ratios. We are seeing the "dumb money"
ratios come well off of their early January
overly bullish sentiment, coming down toward
areas that have triggered decent buying
opportunities in 2009. The concern we have is
if this bull market is coming to an end, we
could see these dumb money ratios move down
toward the levels we saw in late 2007 to early
2009.
Chart provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
The smart money of the OEX put/call ratio is
still on the bearish side, but it is off the
worst levels and is close to breaking its
downtrend. This is telling us that while the
dumb money is getting more nervous, the smart
money is getting slightly more bullish.
Tomorrow is Friday and for the last several
months we have seen an interesting pattern with
Friday and Monday trading. I am taking into
account Tuesday's trading action if Monday was a
holiday.
We have had 8 consecutive positive Mondays (or
holiday week Tuesdays) in the market, and 13 of
the last 14 have been positive.
The last 3 Fridays have been negative and only 7
of the last 14 Fridays have been positive. All
3 of the Friday's during that period, that were
jobs report Fridays, were positive.
Consensus estimates for this Friday's jobs
report are for a gain of 15,000 jobs in January,
with an unemployment rate of 10.0%. It's
interesting to note that
briefing.com's
estimate is for a loss of 40,000 jobs. That's
quite a difference. That tells me that the
"whisper number" may be lower so we could see
the market react positively if we do see any
kind of positive number. We'd probably have to
see a loss of something over 50,000 jobs to see
a negative reaction - but who knows. There is a
caveat. February happens to be the month that
huge
revisions are made to old reports and they
are talking about seeing over
800,000 job losses added to those old
reports. I don't want to sound like I am
putting a bullish spin on everything, but when
you hear something like that, which you would
think would be a huge negative for the market,
it is usually already priced in and the market
does the opposite of what you and I (or any dumb
money) might think would happen. It's too easy
to say the market will sell-off on something
like that.
Thanks for
reading. We'll see you back here tomorrow.
Tom Crowley
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