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Today's Commentary

Can bearish sentiment keep rally going? Stocks closed higher yesterday despite some disappointing economic news.  The Dow added 45-points on the day - slightly off the highs, but well off of the lows. For the TSP, the C-fund was up 0.23% yesterday, the S-fund gained 0.18%, the I-fund added 0.34%, and the F-fund (bonds) ticked up 0.01%.  The S&P 500 is doing a pretty good job of holding support but still needs to break above the top of the new descending trading channel (red lines.)                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk One of the reasons I did not get too bearish when the market was pulling back and doing some technical damage to the charts was because of how bearish "the herd" was becoming.  This AAII Investor Sentiment Survey (not our survey) came in with a 0.66 to 1 bulls (41%) to bears (27%) ratio.  I drew lines showing the last several times we saw a ratio this low or lower.                                                    Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The market has a pretty good record after investors get this bearish. Our TSP Talk Sentiment Survey came in at 1.43 to 1 bulls (50%) to bears (35%) ratio. That isn't overly bearish at all, but this survey was taken a couple days after the AAII survey, which was after the market rallied a couple of days off of the bottom.  The 1.43 ratio is a neutral reading so the system's allocation remains 100% S-Fund for next week. The system is currently up 9.16% in 2011, through Thursday's close. Thanks for reading!  Have a great weekend!   Click here to discuss today's Market Commentary Tom Crowley

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