Today's Comments (Short Term Outlook)                             Printer friendly

And, here we are Stocks moved higher early yesterday, then either the overbought condition, resistance, Bernanke, or a 4% jump in oil prices, put the breaks on the rally.   The S&P 500 stalled at resistance and as overbought as the market is, it should be difficult to move higher from here.  That is, if the bear market is going to continue.  Bear market rallies tend to stall when overbought, but if we have in fact put in a bottom, perhaps the excess cash on the sidelines and the overly bearish herd can propel the market higher despite the obstacles.                                       Chart provided courtesy of www.decisionpoint.com It may not be a reasonable thing to expect, but I guess it's possible.  When Bear Stearns collapsed, it could have been the washout bottom we have been waiting on.  We seem to have been rallying since then.  If it was [the washout], the test is coming.  The NYSE is as overbought as it has been all year and we have to be cautious looking forward.    Friday's jobs report could be the stimulus that pushes the market back down from these overbought levels, or it could be the catalyst that stocks need to rally despite the overbought conditions.  Speaking of catalysts; the weakness in the financial stocks has been the real catalyst of this bear market and they have also been attempting to rally.  Like the S&P, they are now also facing resistance and the market may just follow along with this group.  If they can break their downtrend, or at least make a move up to the 200-day moving average, then the rest of the market will likely tag along.                                           Chart provided courtesy of www.decisionpoint.com If however, they turn back down as they have done each time they moved above the 50-day moving average, the broader market will likely head south as well.  With Bernanke talking recession yesterday, but stocks basically hanging in there after Tuesday's huge rally, perhaps the worst is over for the market.  Recession data is rearview mirror information, meaning by the time you hear the news it has happened already - perhaps weeks or months ago - and the market may have discounted all of the bad news already.  We could see another financial institution fail, but after Bear Stearns, it will not be a shock - unless it's one of the larger firms like a JP Morgan or Citigroup.  Bear's demise may be the worst thing that happens and if the market survived that, any other bad news may be just minor annoyances. To be honest, I have mixed feeling about the market right now.  Bear markets tend to last 9 months or more on average.  This one is barely 5-months old.  But the Fed has thrown everything including the kitchen sink at the financials and the market to keep things afloat.  Recession or no recession, they seem determined to save the market at all costs, so I don't know how much we should be fighting it.  The old mantra says, "Don't fight the Fed", but is it different this time?  It rarely is. That's all for today.  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.