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Today's Comments (Short Term Outlook)
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The right side of the chart Stocks dropped yesterday on light volume, giving back much of the gains picked up on Friday. The Dow lost 1.8%, the Dow Transportation stocks lagged again dropping nearly 4%, but the Nasdaq, which has also been lagging, actually held up pretty well losing just 0.4%. The S&P 500 dropped 2.2% although volume dried up after last week's big jump in volume.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The story remains the same. We have an overbought market that is holding up well, but has some serious resistance overhead. This week should prove interesting. The big battle remains between the bulls, who believe the market has bottomed and a new bull market has begun, and the bears who believe this is a typical bear market rally that is due to peak. The dollar continues to struggle as we saw a break of solid support last week and it could not hold above the 200-day moving average. It did rebound some on Monday pushing the index back above the low made in March, but it remains below the 200-day moving average - which is not a great sign - but it would benefit the I-fund.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk As we head into the thick of the month of May, where seasonality becomes less attractive, this rally faces a strong test. Does it have enough to continue while being so overbought, or will a pullback or correction (10% decline) be in the cards? Stay tuned, because I have a feeling that whichever way this thing wants to break (up or down) it could be explosive. That's all for today. Thanks for reading! See you back here tomorrow! |