I have been hoping for a day like we had yesterday for about a week now. Last week the "emotional money" was buying early and the "smart money" was selling late. Market bottoms tend to see the opposite which is what we had yesterday. The last half hour has me concerned as you'd rather see the buying end in a crescendo rather than fizzle. Here's the intraday chart of the S&P 500...
Chart source http://finance.yahoo.com
After yesterday's interfund transfer I am now 60% C, 40% S fund. See yesterday's comments below for reasons why I went back into the S fund. The I fund let me go on the final day with a little Bronx cheer as the dollar rallied again.
Right now we have to be careful what we wish for. The short term sentiment indicators are looking good as far as putting in a temporary bottom, but if we want this to be THE bottom, from a longer term standpoint, we would actually like to see a deeper, more painful sell off here. I'd like that to happen eventually but I wouldn't want to be caught in it right now. That type of bottom may take months to develop as I talked about yesterday, but you never know. That is why I will quickly go back into defensive mode when the market becomes overbought again. That may give us a few weeks.
At this point I have put all my eggs into the stocks basket and will try not to let any wiggles here effect my psyche. The bottom is trying to form but it may not be clean. One might be better off turning off the sound while watching CNBC. I have done that in the past and it is a good strategy. These arguing bulls and bears can make your head spin. That one knucklehead from Goldman Sachs who predicted oil will go over $100 was being pretty irresponsible if you ask me. The "smart money" on our message board seems to have realized this. If you haven't checked it out, you are missing some very informative market, TSP, IRA, retirement, etc., conversations on the board. I appreciate all of your input. As far as I can tell, it has become the best and largest TSP message board.
While that knucklehead was out of line, oil does continue to be a major catalyst for the market (hence the irresponsibleness). You can almost try to time oil and then use the opposite direction for stock market predictions. We need oil to pullback now if we want any kind of serious rally to start. You can see it rallied strongly yesterday but hit resistance and pulled back some. Let's hope that is at least a short term top.
Chart provided courtesy of www.decisionpoint.com
If you are looking for another catalyst for the market, we are now beyond earnings warnings season and heading into earnings announcement season. A couple of good reports from big companies would sure be refreshing.
That's all for today. Currently 60% C, 40% S fund. See you tomorrow.
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