Market Comments May 14, 2009  Current TSP Share Prices

Today's Comments (Short Term Outlook)                            Printer  friendly

Bulls need to step up, or else... Stocks were beaten down again yesterday after a weaker than expected retail sales report.  The leaders continue to show weakness and are at a point where they need to hold, or it could get bad again. The S&P 500 lost 2.7% yesterday and broke below the recent ascending trading channel before finding some support at the 20-day moving average and closing just above it at 884. The 50-day moving average is the next level of support and that is currently near 851.                   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Taking a look at those market leaders again, the Dow Transports and the Nasdaq, shows us that the Transports closed at the 50-day moving average and also at the old descending resistance level. It is pretty much make or break for this index after it lost nearly 5% again yesterday.  Is this what is next for the S&P 500?                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The Nasdaq isn't doing quite as bad as the economically sensitive Dow Transports, but it has also broken below the 20-day moving and may be testing the 50-day moving average some time very soon.                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk All three charts have the PMO indicator doing a bearish crossover, and the MACD indicators all show a major negative divergence.  Not a great technical picture.  The put / call ratios are again getting extremely bullish readings from the dumb money (which is generally bearish for stocks) while the OEX smart money put / call ratio is as bearish as it has been all year (also bearish for stocks).                   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk You can see from prior readings at this level that the market rallies ran into trouble. We have been expecting a pullback although the recent rally went on much longer than we had anticipated.  Based on the 2000-2002 bear market action, I had expected a best case scenario for stocks to be a move back to the 200-day moving average and the market did just that - a best case scenario, leaving many of us bears far behind.  The question now is whether this will be a pullback (5% to 10%), a correction (more than 10%) or the start of another leg down for this bear market.  So far the S&P 500 is off about 5% from the recent high so the bulls may want to make their move pretty quickly before the bears get some real momentum. That's all for today.  Thanks for reading!  See you back here tomorrow!