Today's Comments (Short Term Outlook)                             Printer friendly

Sentiment suggesting herd interested Stocks rallied late Friday as the market continues to test resistance.  The battle for a breakout, or a pullback is on. The S&P 500 finished strongly on Friday bringing the index back up toward the early February highs.  There is a confluence of resistance above so the bulls will be tested this week.                          Chart provided courtesy of www.decisionpoint.com - with analysis by TSP Talk Last week's AAII Investor Sentiment Survey saw a sharp decrease in bearishness.  Although the numbers are not extreme, the 28% bearish reading, as well as the 1.68 to 1 bulls to bears ratio, are the highest we have seen this year.                         Chart provided courtesy of www.decisionpoint.com - with analysis by TSP Talk Over the last year or two, bearish readings below 30% (above on the inverse chart) have been accompanied by the market run out of steam.                                        Chart provided courtesy of www.sentimentrader.com The weekly chart shows us that we saw a higher ratio (than the current 1.68 to 1) back in early October 2007, and that coincided with the last fall's market peak as we can see above.                        Charts provided courtesy of www.decisionpoint.com - with analysis by TSP Talk ... But the monthly chart shows that 1.68 ratio is a mere speck in the middle of the chart as during bull markets we can get bulls to bears ratio readings of 6.0 to 1, 7.0 to 1, or even higher.  So, to call 1.68 to 1 high is a stretch, but during a bear market it can be.                         Charts provided courtesy of www.decisionpoint.com - with analysis by TSP Talk The question is, are we entering a new bull market or has "the herd" become too complacent during a bear market rally?  I wish I knew for sure, but I think it calls for at least some short-term defensiveness. Interestingly, the SentimenTrader.com Smart Money / Dumb Money Confidence indicator shows that both the smart and dumb money at 54.  That, in and of itself, does not tell us much but notice that the smart money line is going down, while the dumb money is going up.  Normally, numbers above 60 and below 40 are significant.                                 Chart provided courtesy of www.sentimentrader.com This could indicate that we are due for more chopping around without much direction.  I wouldn't be surprised if any breakout is sold, or sell-offs are bought and we remain in a trading range. 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 transferide 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