Today's Comments (Short Term Outlook)                             Printer friendly

Market embraces positive earnings It has been a while since the market has had something to celebrate, but yesterday's positive earnings reports finally took investors' mind off of the persistent financial crisis.  Even some financial companies reported "fair" earnings.  Those earnings weren't great, but they were in line with estimates which provided the market with a collective sigh of relief. I talked yesterday about the distinct 4-point pattern we are seeing and opined that we could be at a point 2 heading toward a new point 3.  Yesterday's big rally is a start to keeping the pattern going but if it is to continue, the S&P 500 should stall somewhere short of 1395.  If the S&P can manage to move above that level, it will be a positive sign for a potential break in the downtrend, but then it will have to contend with the 200-day moving average, which can be formidable during a bear market.                                      Chart provided courtesy of www.decisionpoint.com                               We have been down this road before.  We have seen several explosive 200 to 400-point rallies this year but each of them have turned south, leading us toward lower lows.  Will the pattern be broken? I was curious about what the smart money was doing during yesterday's rally so I pulled up the daily OEX put/call ratio chart.  This daily indicator is very volatile and it's why I normally use the 10-day moving average of the indicator, but I wanted to see if the smart money became defensive (bought puts) during the rally, or if instead they saw something they liked and bought more call options (bets the market will go higher).  You can see below that the indicator moved down to 1.65 which is fairly defensive, but not quite as defensive as we have seen during other big rallies this year.  It's not necessarily a bearish sign looking out more than a few days, but any follow-through to the upside today might bring it to those prior levels closer to 2.0.  When there is a sharp spike to the downside in this indicator, the market tends to follow soon after and this group of smart money may just be trying to protect some gains.  They will likely load up on calls again once we do see a pullback.                                      Chart provided courtesy of www.decisionpoint.com I am also curious how you feel about the market now.  This week's TSP Talk Sentiment Survey should be interesting.  This new life in earnings could be what finally triggers the turn for the market, but as I said, we have been down this road before.  What say you?  Are you interested in this market now, or are you still skeptical?  Please let us know by taking the poll. Has your account been restricted?  Those who have been forced to make their interfund transfers by mail have not surprisingly seen delays in execution.  I have been told, but can't confirm, that the TSP is accepting the interfund transfer Form TSP-50 via fax.  If it is true, the fax number is 866-817-5023.  That should be a big help, although it doesn't guarantee they will process your requests any quicker.  Good luck. 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