Market Comments May 15, 2009  Current TSP Share Prices

Today's Comments (Short Term Outlook)                            Printer  friendly

Bulls hold for now Stocks had a timely rally yesterday, after this week's "sell the news" reaction to last week's stress test results and better than expected jobs report. I say "timely" because, as we discussed yesterday, many of the major market indexes were nearing support levels such as the 20 and 50-day moving averages and trend lines, so yesterday's rally gave the bulls some hope that this pullback may not turn into a 10% correction, or worse. Volume was light and the buying was not very enthusiastic as there was some late selling taking the indices off their highs. The S&P 500 picked up 1% and, although it's a little difficult to see in the chart below, it did bounce off of that 20-day moving average, but the rally stopped at the old trading channel support line that may now act as resistance.                   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The Nasdaq and Dow Transports have both already witnessed a PMO crossover sell signal, but so far the S&P 500's PMO has not.  (The PMO is the between volume and the MACD indicators above.)  It's close, but officially the indicator remains above its 10-day moving average. Too far, too fast?  The chart below shows the percentage of stocks on the NYSE that are above their 20 and 50-day moving averages.  In early March only about 5% were above the 50-day moving average, but by early May that number went over 90%.                   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk It appears that the 70% level seems to be a point of exhaustion.  Of course the reason it was able to get to 90% was because the 50-day moving average had moved down so sharply in such a short amount of time.  The 30% rally in stocks made it quite easy for stocks to move above their 50-day moving average. So, while this is a bullish sign (stocks being over their 50-day moving average) it also indicates that stocks may have moved up too far, too fast, and a pullback (at best) is due.  This week's sell off brought out the bearish sentiment in our readers.  Our Sentiment Survey came in at 34% bullish, 56% bearish this week.  That is still a neutral reading, but the 56% bearish reading is the highest since the 64% reading in the March 5th survey.  That following week (March 9 - 13) stocks rallied almost 10%. That's all for today.  Thanks for reading!  Have a great weekend, and we'll see you back here on Monday.