Like the 1994 chart I displayed last week (and still at the bottom of this page), the S&P 500 is flirting with the recent low. In 1994 that low held. I've been counting on it holding up this year as well.
Chart provided courtesy of www.decisionpoint.com
Rydex funds are giving us another contrarian signal. The spread of money in defensive sectors (i.e. Utilities, health care, precious metals) as compared to money in aggressive sectors (i.e. Tech, internet, etc.) has never been wider in the past 5 years. This is another indication that people are getting too pessimistic and a rally should be close at hand.
You can see by the chart below that this doesn't always pick the exact bottom, but it comes pretty close...
Chart provided courtesy of www.sentimentrader.com
How 'bout that dollar? Just when all the "experts" said it was done for, and that it will continue to go down, it seems to have confirmed that the low put in late last year, was indeed a longer term bottom. It had a big breakout Thursday and Friday.
Chart provided courtesy of www.decisionpoint.com
In the short term we don't know if there will be a little pullback or not, but for the long term, the bottoming dollar may mean a little trouble for the I fund. It may still go up, but I like to compare it to running in peanut butter. It won't be as easy as it has been over the past couple of years. That's why I am liking the C and S funds over the I fund right now.
I wish I had more to add here. I could tell you the overbought/oversold indicator has dipped into oversold territory. Or that the "smart money" sentiment survey is 2 to 1 bulls to bears. Or the ARMS index ... blah, blah, blah... The market is struggling externally while the indicators tell us there is not too much to worry about. It might be a tough sell to those sitting on the fence. The bears are likely patting themselves on the back, and rightly so. They have been on the sidelines and that has been the place to be for several weeks. I just hope they (at least the ones who read TSP Talk) can be flexible enough to recognize the change when it comes, and not get married to being bearish. There will be opportunities to make money in this market. I think we are at one of those points so I'd be a buyer (bull), not a seller (bear).
That's all for today. Currently 65% C, 20% S, 15% I fund. Until next time...
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