The glass is half empty again

I know I keep looking at the negative side of the market, but that is because I am looking for the evidence that the effects of the two of three legs of the market that are wobbling may bring with it some consequences for stocks.  The monetary conditions and psychology legs are still on the negative side while valuation remains good.  You want to see two of three legs in positive territory before you get fully invested in stocks.

As we have seen, two of three negative legs doesn't necessarily mean the market is going to head down everyday.  It just means to be a little more conservative, just in case.  It hasn't paid to be too conservative lately but like the roulette analogy where, against all odds, 10 red can come up in a row, the market can move higher when things aren't perfect.  In the long run however, things tend to even out.

So, my negative outlook is based on this 2 of 3 scenario so I look for reasons why things may not be as good as they seem.  Yesterday (see Thursday's comments below) I showed several reasons for concern.  Another thing I talked about the other day was that tech stocks were not leading the way during this last push higher.  A strong bull market is normally led by techs.  Yesterday the Dow was up nicely again, but once again the tech heavy Nasdaq and the Nasdaq 100, which is an index of the largest tech companies, were down more than modestly. 

       

       

The semiconductors index has also not participated in this latest rally.  That could mean they will catch up, or it could be a sign of trouble as again, we want to see tech stocks take the lead.


                                   Chart provided courtesy of www.decisionpoint.com

Bonds had a very strong day Thursday.  I mentioned in yesterday's comments that bonds were very low in price compared to stocks.  The ratio was 3 deviations away from the norm which is more than extreme and either stocks have to come down, and or bonds have to move higher to correct that situation.  Yesterday bonds moved up talking a little pressure off of stocks.

Today is triple witching day and several options of futures contracts expire today.  After the interesting week we had, I am very curious how traders wrap it up.  There usually isn't too much volatility on options Friday, but I have a feeling it may be an exciting day, one way or the other, or both.  Mondays following options expirations week have been on the weak side this year.

I'm off to a late start tonight (I'm writing this Thursday night) because I have been overdosing on NCAA basketball all day.  I'll end it here with a warning from the Thrift Savings Plan.  Currently 100% G fund.  Thanks for reading.  Have a great weekend.

Important note: From the TSP.gov website:

http://tsp.gov/curinfo/emailscam.html
 

E-Mail Scam
 

Some TSP participants have received an e-mail purporting to be from the TSP. The e-mail asks for confirmation that the participant has added an e-mail address to their TSP account. The link in this e-mail takes the person to a bogus version of the TSP account access screen where it asks for your Social Security Number and PIN. It then takes you to another screen where it asks for credit card and banking information.

PLEASE BE ADVISED THAT THE E-MAIL IS NOT AN OFFICIAL THRIFT SAVINGS PLAN COMMUNICATION!

You should never give any personal, credit, or banking information in response to unsolicited e-mails; the TSP would never ask for this information via an e-mail. If you did provide this information, contact your credit card company/bank immediately and seek guidance. In addition, call the TSP and ask to have your account access blocked (1-877-968-3778).

Do not try to access the TSP Website by clicking on links in this or any other e-mail. They are trying to steal your personal information (always access your account only by opening a new Browser window, and typing http://www.tsp.gov into the Address/URL field).

The TSP is actively investigating this matter. In the meantime, it has temporarily suspended the Account Transactions portion of Account Access.
 

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