A day of rest and resistance

Stocks opened lower on Wednesday, but spent the rest of the day steadily climbing higher before the Dow closed up 67-points.

                                  

I found the steady rally encouraging, but the fact that this is another day that S&P 500 could not close above the 20-day EMA is a little troubling.

                       
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

We are seeing various major indices sitting just above or just below the 20 and 50-day EMA's and this market can easily go either way.  I find it interesting that several of our Premium Services gave new signals in the last week, but not all are pointing in the same direction.  It's a confusing market.  Yesterday the bulls won, but what happens today?

The smart and dumb money are on the same page lately, something that doesn't happen very often.  According to the put / call ratios, the dumb money has only been this bearish a few times in the last couple of years.  That is usually a bullish sign since the dumb money is a contrarian indicator.

But the smart money put / call ratio is also hitting very extreme bearish readings, which is usually bearish for stocks.
                        
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The bearish sentiment leads me to believe that the market could stay buoyant, but the inability of the S&P to recapture the 20-day EMA should be a warning to us.  It could get volatile with a lot of big swings while it digests the world's economic, geo-political, and natural events.

I am looking for another big move in the market in the coming days, but I wish I knew which direction that was going to be.  That's why I am 50% stocks, 50% G-fund right now.  I'm very non-committal at the moment.

Thanks for reading!  We'll see you back here tomorrow.

Tom Crowley