It would be nice if the market dropped the day I get out of stocks, and the day after, and everyday until I decide to get back in. But of course that is never going to happen.
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Tuesday's strong rally sent the S&P 500 up to 1209 and
it looked like a great day to get out of stocks so I
raised my G fund allocation to 70%. Before the
market closed however, the indices fell to the lows of
the day. Yesterday the S&P 500 fell to 1191 before
recovering. So from top to bottom, the S&P dropped
1.5%. But ironically, Thursday's close was
actually higher than Tuesday's giving the S&P 500 a
small gain. Oh this short term trading is tough.
 Of course I'm not really playing the day to day wiggles. I'm looking for a more dramatic drop soon. Something similar to what we saw in 1994 during the bottoming process that year... |
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The new AAII Investor Sentiment
Survey came out yesterday with little change from last week.
46% of the "dumb money" polled say they are bullish while 20% are
bearish. 46% is still on the high side (too bullish) but it
will fall as the market falls. Last week it was 49% to 19%.
The time to get back into the market is when the "dumb money"
bearish percentage goes to the 35% to 40% range. I may be
starting our own market sentiment survey here to see how we do.
From sentimentrader.com ..."A couple of the technology funds, such as the Internet
and Semiconductor (Electronic) funds, Rydex traders actually showed
a relatively large bearish shift. They ended up pulling a net $43
million out of the bullish S&P 500 and Nasdaq 100 index funds, and
put a net $52 million into the bearish index funds. That’s the
biggest bearish shift, in fact, since the day the market bottomed on
April 20th. Of course, at that time it looked like more of a
capitulation after a long decline, while now it could be the initial
warning shot that investors are beginning to pull in their risk
tolerance after a rally, which would not be a positive development."
The choppiness of the market lately has actually brought some of the
shortest term indicators back to neutral which doesn't give an edge
to either being bearish or bullish over the next day or so.
It's those intermediate term indicators that are still leaning
toward being overbought that has me defensive.
Intel posted a solid earnings report after the close Thursday.
While that sounds like good news, Intel actually rallied before the
news, and saw some selling in after hours trading just after the
news was announced. Buy the rumor, sell the news? Intel
has a history of giving the market a short term bounce on good news,
only to be sold shortly afterward. If we see a significant
rally early Today (Friday) I may to 100% G (or F) fund.
That's all for today.
Currently 70% G, 30% S fund. Until next time...
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