Every picture tells a
story
The market always seem to go up more than you'd think it would during
rallies, and down more than you'd think it will during corrections.
It's gotten to the point where words are just opinions so I'll just show
you what I am watching.
Yesterday I sarcastically talked about how the market didn't know what
it was doing. I had not mentioned one very important issue that
the market seems to be ignoring; Rising interest rates.
Here is a graph of the yield (interest rate) of the 10 year T-Note:
You can see the rates have moved up from a low near 3.8% during the
summer, to over 4.7% today.
Chart provided courtesy of
www.decisionpoint.com
Investors, particularly large investors, have to decide where to put
their assets and their two main choices are usually stocks or bonds.
When bond yields rise (and bond prices go down) bonds become more
attractive to investors.
Right now the value of stocks to bonds in at a dangerous level for
stocks holders. This is not the S&P 500 earnings yield to bond
yield that I mention often, but rather a stock to bond price ratio.
The reading of "3" here represents the standard deviation away from the
norm. "2" is extreme. A "3" occurs about 1% of the time.
Chart provided courtesy of
www.sentimentrader.com
Again less talk more pictures. The recent rally has
brought the short overbought/oversold indicator (blue lines) back to the
top of the range it has been in since the summer months, save the early
January rally.
Chart provided courtesy of
www.decisionpoint.com
The longer term indicator (within the channels) seems to making the turn
from overbought to oversold. It looks like it could take another
couple of months to get to the bottom to complete the cycle.
Chart provided courtesy of
www.decisionpoint.com
The
10-day moving average of the ARMS index
is back to the .90 level, typically a point where the market takes a
break.
It's tough to watch the market these days without thinking happy days
are here again, but for TSP participants who can't act as quickly as
most traders, I think the signs are there that taking profits here in
the next few days or weeks could be a wise move. Those of you who
have made some nice gains lately may want to save some for a rainy day.
That’s all for today. Currently 100% G fund. Thanks for reading.
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