Today's Comments (Short Term Outlook)                             Printer friendly

Financials throw the rally a test Stocks saw a modest rebound yesterday after Wednesday's 200-point sell-off.  We have seen a decent rally off of the March lows but the financials may get in the way again. I mentioned yesterday that the S&P 500 is still below 200-day simple moving average (SMA), but I did not show the chart.  Here it is.  You can see that we are starting to see a reversal down off of that SMA but the 20-day exponential moving average acted as support yesterday.  The 200-day MA is obviously more of a force than the 20-day, but it's interesting to watch how the indices dance with these moving averages.                     Charts provided courtesy of www.decisionpoint.com - with analysis by TSP Talk The recent uptrend is still intact despite the sell-off on Wednesday, but we should be getting a little test of the lower end of that trend very soon.  After the bell yesterday, AIG reported a very weak earnings report and the financial sector should pay the price.  This will be the test. The financial ETF, XLF, is in a similar situation as the S&P and today we may find out if the rally is strong enough to shrug off some bad news, or if this is the start of another move toward the lows.  By the way, AIG was down over 7% in after hours trading yesterday.                    Charts provided courtesy of www.decisionpoint.com - with analysis by TSP Talk The SentimenTrader.com confidence indicator shows that the "dumb money" indicator reached 67.  Anything over 60 is a concern.  In conjunction with the 60+ dumb money reading, we would normally look to see the smart money indicator move below 40 before we get a sell signal.  It is currently 50, so while this not a bullish sign for stocks, it is not an official sell signal yet.                               Chart provided courtesy of www.sentimentrader.com The TSP Talk Sentiment Survey system came in at a pretty bearish 0.75 to 1 bulls (38%) to bears (51%) ratio, which is historically bullish for stocks.  In the past this has been a decent time to buy, but this year these signals have not been very consistent.  That's all for today.  Have a great weekend. Have questions?  Visit our message board for answers.  Would you like to be on our email alert list?  We will send you an email when there is a change to our asset allocation or market outlook.  Your email address will never be given out.  Read our privacy policy.  By signing up you agree to the TSP Talk Terms of Service.  More details below **. Are you bullish or bearish?  Join the Weekly Sentiment Survey. Like what you're reading?  Tell a Friend about us. ------------------------------------------------------------------------------------------------------------------- ** By joining our email alert list you will receive an email each time we initiate a transfer or change our market outlook.  You may also receive an email each Monday morning reminding you that our comments are updated daily.  We will always send out these emails prior to making the transfer myself but we can not guarantee you will receive it in time to make a transferide to follow our transfers in your own account, you do so at your own risk.  There is always a possibility for a loss in your account.  These transfers could come very often and you may have to act quickly to make the deadline.  Please consider your investment strategy before taking any advice or making any transactions.  By reading the contents of TSP Talk.com and accepting the email alerts, you must agree to the Terms of Service.  Thank you. TSP Talk