Today's Comments (Short Term Outlook)                             Printer friendly

Getting nervous? You're not alone February's jobs report was a big disappointment coming in with a loss of 63,000 jobs versus the estimated 25,000 gain.  Despite the Fed's $40 billion Term Auction Facility (TAF) attempt to deflect the blow of the jobs report, the Dow experiences a triple digit loss when the day was done. We are seeing reasons to be very nervous, but nerves are much higher today then they were just a week ago.  This makes me think relief may not be far off, although that would likely be short-term relief.  Until further notice, we are in a bear market and we want to approach our account appropriately.  That is, we can play short-term bounces, but keep the caution level on high alert.  You can see below that the S&P 500 came within a stone's throw (12-points) of the January low of 1270.  We saw a small mid-day rally allowing the index to close off its low, but once again volume is not at the level you'd like to see at a capitulation bottom.  For that reason I believe that, while we are due for an oversold bounce, any rally will be short-lived and a longer-term bottom is not in site just yet.                                  Chart provided courtesy of www.decisionpoint.com      Most of you know how frustrating the market can be - doing what we'd least expect it to.  Fear is getting pretty high so a bounce here seems to be the least expected event.  But, market crashes are also very rare and not really expected, and like a rebound, they also tend to manifest from an oversold market.  The NYSE is at its most oversold level of this inauspicious 2008.  So odds are that buying here is not a bad move, but it can turn out disastrous if we are wrong.                                     Chart provided courtesy of www.decisionpoint.com The sentimentrader.com website's smart money / dumb money confidence indicator shows that the the smart money reading of 58 is getting up there, but it's not a very extreme reading.  But the dumb money is down to 25 - an historically low number that tends to indicate a short-term bottom is close at hand.                                 Chart provided courtesy of www.sentimentrader.com The spread between the two is also at an extreme level, only seen near at least short-term market bottoms.  It's not a precise indicator, but it shows us the odds favor some relief.                                Chart provided courtesy of www.sentimentrader.com                          Using sentiment again, here are the sentinentrader.com's indicators that favor the bullish and bearish sides.  As you can see the bearish side is a little light.  Historically, this would be a good time to buy.  But is it "different this time?"                            Chart provided courtesy of www.sentimentrader.com Bonds (F-fund) did put in a modest rally Friday after the weak jobs report, keeping them in the uptrend for now.  Until that breaks, and as long as the AGG remains in the lower portion of its rising trading channel, the F-fund remains in play. The TSP Talk Sentiment Survey came in at 26% bulls, 61% bears, for a 0.43 to 1 ratio.  That keeps that system in the S-fund for this week.  I did play with the formula a little to see if there was any change I could make when the S&P 500's 50-day moving average was below the 200-day moving average, but unfortunately nothing really worked.   That's all for today.  I hope to 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.