Today's Comments (Short Term Outlook)                             Printer friendly

A move to 20-day average After early strength, stocks retreated giving back a fraction of Tuesday's big gains.  No harm, no foul yet considering the fear factor and the profits that were there for the taking, but the bulls won't want to see much more of a decline or the relief rally could be in jeopardy. Yesterday's morning rally made it up to the 20-day moving average, which is a clean place to take a breather, but as I will show you down below, the 50 and 200-day moving averages are also common targets for bear market rallies.  But until the S&P 500 moves over the prior two peaks  of 1380 and 1396 (higher highs), we will not have an official double bottom, even though the low has held so far.                                 Chart provided courtesy of www.decisionpoint.com In 1998, the "W" formation was a classic, clean, double bottom;  A high volume capitulation break of the prior low that closed above that low.  Then the rally made it up over the prior high.  I don't recall what happened then, but I can only assume sentiment was quite bearish on that test of the low.                                 Chart provided courtesy of www.decisionpoint.com In 2002, we saw a similar formation.  But when the rally off of the successful test could not make it above the prior high, it was not an official double bottom.  Instead we actually saw a rare triple bottom hold 5-months later, becoming official after the successful breakout over the prior high.                                  Chart provided courtesy of www.decisionpoint.com In 2000-2001 we saw some failed double bottoms and even then the rallies made it back up to the 50-day and / or 200-day moving averages before heading south again.                                   Chart provided courtesy of www.decisionpoint.com What does this mean for us now?  I would not be surprised if we see lower lows in the coming weeks, but I would be surprised if this market tanked so quickly that we don't get a little more upside before that happens.  I would be a seller if we hit the 50-day moving average, but if we see a higher near 1400, it would be a double bottom and we'd have to start thinking bull market again.  The indices are still oversold and the sentiment indicators are overly bearish.  There should be enough cash on the sidelines to suck in some of the bears into the bullish camp and keep the rally going.  That said, many of the pressures that brought the market down are still around including oil hitting $110 a barrel.  The futures and the Asian markets are deep in the red as I write this.    Bonds soared yesterday as we got what I believe was our first ever one day 10 cent gain in the F-fund.  The support in the AGG we talked about yesterday held up and a powerful rally ensued. That's all for today.  See you tomorrow. Press Release from TSPshareholder.org - 03/12/08 New figures show 2007 TSP trading costs are lower than previous year. 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.