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| Today's Commentary (Short Term Outlook) |
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Testing the flat top Stocks opened lower yesterday, but rallied throughout most of the day, despite what many of us thought might be a catalyst for a well overdue pullback. The Dow gained 44-points on the day after the health-care bill was passed in The House. For the TSP funds the returns were mixed. The C-fund picked up 0.51%, the S-fund jumped 1.19%, the I-fund actually slipped 0.04%, and bonds added 0.11%. The S&P 500 was up 0.51% but put in a lower high below the "flat top" near 1170 created by last Wednesday and Friday's highs. Many times flat tops create downturns, regardless of how benign they may turn out to be. I am still anticipating, or at least hoping for, a pullback to the 1145 to 1150 area, the next levels of support.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk This 0.51% gain in the S&P, and the 1% plus gain in the small caps is quite a feat considering how the indices sold off in the overnight futures on Sunday evening. The fact that buyers stepped up and bought again, despite concerns over the health-care bill passing is very bullish, but once again the S&P 500 index has another overhead test with that flat top. If there was a negative it was that volume was very light compared to Friday's heavier volume trading during the sell-off, but Friday was an options expiration day and they are almost always accompanied by high volume. There was not much of a change in any of our regular indicators. The indices remain overbought but they are off their extremes of last Wednesday. Sentiment remains overly bullish, but only some of those indicators are near extreme levels. If the S&P can push above that flat top, I would have to expect a move to the top of the rising trading channel again, and with the month running out of days, and two IFT's, I would not rule out a few days in the market - but bailing at the top of that range. I will also consider buying a move down to 1145 to 1150. It's just a thought that I will decide on the spur of the moment, probably just before one of this week's transfer deadlines. One thing I don't want is to get caught jumping in, just in time to get sucked into a pullback, then sit and wait for a rally to sell, that may not come right away. That seems to happen over and over. So the questions is, patience or quick trades? I may just have to look to my premium services for this one as they continue to outperform my return. Thanks for reading. We'll see you back here tomorrow. Tom Crowley |