Today's Comments (Short Term Outlook)                             Printer friendly

Stocks tumble on earnings - more to come GE's disappointing earnings report triggered a sell-off on Friday sending the Dow down over 250-points.  That sets us up for an interesting week this week as 9 of 30 Dow Jones Industrials companies will report earnings, as well as about 80 financial companies. Many have been calling for a bottom recently, and that may be contributing to the market's inability to break to the upside, but as bad as the news has been lately, the major indices have been able to hold on to the mid-March lows.  That has to be looked as as a positive. The S&P 500 chart has begun to roll over again after hitting resistance.  The  20-day exponential moving average (EMA) made an attempt to cross over the 50-day EMA, and during a bear market that can lead to overbought selling.  That's where we seem to be right now.                                       Chart provided courtesy of www.decisionpoint.com The question is, how will stocks react to the earnings reports, particularly if the market becomes oversold?  I'm seeing the PMO indicator (bottom indicator above) rolling over again, but if stocks can withstand a wave of disappointing earnings from the financials without breaking below the March lows, we'll have to consider the possibility that we have seen the bottom, but I'm still in a "show me" state of mind and staying cautious until I see something. As bad as the financials are expected to be, the non-financial Dow companies reporting are expected to be rather solid, which will set up an interesting situation.  The TSP Talk survey came in overly bearish again last week, 38% bulls, 48% bears.  The recent Wall Street Sentiment Survey", which is considered a "smart money" survey rather than a contrarian indicator, came in with a very low 16% bullish percentage versus 47% being bearish.                                      Chart provided courtesy of www.decisionpoint.com There's something out there that the smart money does not like right now, but this is a volatile indicator that can change quickly.  Just four weeks ago this smart money was very bullish (75% bulls) with only about 5% being bearish.  And, as if on queue, the market did rally after that survey.  I expect another wild week.  Not only will we get a slew of earnings reports, but it is also an options expiration week which tends to be volatile.  Let's see how it plays out. 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. ------------------------------------------------------------------------------------------------------------------- ** By joining our email alert list you will receive an email each time we initiate a transfer or change our market outlook.  You may also receive an email each Monday morning reminding you that our comments are updated daily.  We will always send out these emails prior to making the transfer myself but we can not guarantee you will receive it in time to make a transfer yourself.  By joining you understand that this is what the owners of TSP Talk are doing in their own account and if you decide to follow our transfers in your own account, you do so at your own risk.  There is always a possibility for a loss in your account.  These transfers could come very often and you may have to act quickly to make the deadline.  Please consider your investment strategy before taking any advice or making any transactions.  By reading the contents of TSP Talk.com and accepting the email alerts, you must agree to the Terms of Service.  Thank you. TSP Talk