Today's Comments (Short Term Outlook)                             Printer friendly

Some follow-through, and some resistance Stocks followed through impressively yesterday on Thursday's big gains, and now have their work cut out for them as resistance is abundant. The S&P 500 has fought off the attempts to start a new leg down but must now make a higher higher before the bulls, or bears, will be convinced that a bottom is in.  As timers, we don't have to believe that the market is going turn from a bear market into a bull market, but instead we want to know how much can be made from this current rally.                                  Chart provided courtesy of www.decisionpoint.com Whether the bear market is over is not important... yet.  Until it is over, we must become cautious when the market hits overbought levels.  The fact that the S&P 500 has now rallied 7.4% from the recent low (over 8% to yesterday's peak) has me wondering how much more are we capable of seeing.  As I mentioned yesterday, a 10% to 15% bear market rally will be a good time to reevaluate.  If we are indeed just in a bear market rally, we could actually see a move up toward 1430-1440, and still be considered in a down trend.  I'll take that.  That would be the best case scenario for a bear market rally.  If we have put in a bottom, we will obviously move higher, but let's not get ahead of ourselves. We are getting overbought again and that hasn't been good news the past several months.  We should be thrown a little test here as March comes to an end.                                 Chart provided courtesy of www.decisionpoint.com The end of March has a tendency to be a little below average...                                 Chart provided courtesy of www.sentimentrader.com ... while April has done quite well historically.                                 Chart provided courtesy of www.sentimentrader.com This has not been a typical year and I won't look to seasonality as a primary indicator.  More of a consideration. If the market can continue to closely follow the 1998 pattern we talked about yesterday, we shouldn't even be considering getting out or taking profits.  I wish it were going to be that easy.                      Bottom line, the market has come a long way in few days and we could see a little slowing down.  As the NYSE gets overbought, it will be a big test for the market.  Is this just a bear market rally, or are we in fact putting in a bottom?  No one knows for sure.  I believe we could have our answer in the next week or two.  That's all for today.  Thanks for reading!  See you tomorrow. 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.