The short term action may tempt us.
The indicators are quite mixed between the short term and a more intermediate term. I have a feeling (and that is worth very little) that we could see one more little rally before we get that pullback I have been looking for. Something similar to what happened in 1994. Just prior to the 1994 pullback (circled below) there was one more 4 or 5 day rally. One that likely shifted the herd to being too bullish.
Charts provided courtesy of www.decisionpoint.com
I want to make it clear that this 1994 chart that I am following has been helpful but it is not my major indicator for what I use to make decisions. It is the skin on the skeleton, if you will. I have my own market outlook based on my indicators and I look for things that may support that. This chart just gives me a visual of a possible outcome based on similar circumstances.
So, while I believe that we will have a better buying opportunity in July, there are signs that the herd is getting nervous (which is good for the market). From sentimenTrader.com...
"AMG Data reported that equity mutual funds took in net cash inflows of $1.7 billion through Wednesday. What’s notable, though, is that money market funds added $21.5 billion in assets, the largest net inflow since October 2003. I’m not sure if there’s anything to this, but there have been six other weeks in the past two years where money market assets took in $20 billion or more; the next week, the S&P 500 was higher 5 of the 6 times for an average gain of 9 points. The one down week, the S&P lost 8 points, but rebounded 30 points the week after."
As I suspected, the "smart money" investor sentiment survey came in at a much less extreme level this weekend compared to last. Last week the bulls to bears ratio was a stunning 5% bulls / 67% bears. This week it is 43% / 43%. While the bulls jumped from 5% to 43%, that 43% bearish reading is still on the high side, meaning the "smart money" is still not too giddy about the market.
I still have 30% in the S fund (70% in G) and if we do see more strength this week, I could move that into a more defensive allocation. If the market does pullback the S fund may be hit harder as it has outperformed recently. The F fund has looked intriguing as it has been in a strong uptrend for a couple of months now. It could be due for a pullback but right now the trend is intact.
Chart provided courtesy of www.decisionpoint.com
Have you taken this week's sentiment survey (in the left side menu)? I am going to attempt to start a new poll each Friday and cut it off on Monday, asking what you think about the upcoming week for the market. Are you bullish (believe the market will go up), bearish (believe it will go down) or neutral (neither bullish nor bearish)? I will then track the results on the message board. We'll find out if we are the "smart money" or the "dumb money".
That's all for today. Currently 70% G, 30% S fund. Until next time...
The indicators are quite mixed between the short term and a more intermediate term. I have a feeling (and that is worth very little) that we could see one more little rally before we get that pullback I have been looking for. Something similar to what happened in 1994. Just prior to the 1994 pullback (circled below) there was one more 4 or 5 day rally. One that likely shifted the herd to being too bullish.
Charts provided courtesy of www.decisionpoint.com
I want to make it clear that this 1994 chart that I am following has been helpful but it is not my major indicator for what I use to make decisions. It is the skin on the skeleton, if you will. I have my own market outlook based on my indicators and I look for things that may support that. This chart just gives me a visual of a possible outcome based on similar circumstances.
So, while I believe that we will have a better buying opportunity in July, there are signs that the herd is getting nervous (which is good for the market). From sentimenTrader.com...
"AMG Data reported that equity mutual funds took in net cash inflows of $1.7 billion through Wednesday. What’s notable, though, is that money market funds added $21.5 billion in assets, the largest net inflow since October 2003. I’m not sure if there’s anything to this, but there have been six other weeks in the past two years where money market assets took in $20 billion or more; the next week, the S&P 500 was higher 5 of the 6 times for an average gain of 9 points. The one down week, the S&P lost 8 points, but rebounded 30 points the week after."
As I suspected, the "smart money" investor sentiment survey came in at a much less extreme level this weekend compared to last. Last week the bulls to bears ratio was a stunning 5% bulls / 67% bears. This week it is 43% / 43%. While the bulls jumped from 5% to 43%, that 43% bearish reading is still on the high side, meaning the "smart money" is still not too giddy about the market.
I still have 30% in the S fund (70% in G) and if we do see more strength this week, I could move that into a more defensive allocation. If the market does pullback the S fund may be hit harder as it has outperformed recently. The F fund has looked intriguing as it has been in a strong uptrend for a couple of months now. It could be due for a pullback but right now the trend is intact.
Chart provided courtesy of www.decisionpoint.com
Have you taken this week's sentiment survey (in the left side menu)? I am going to attempt to start a new poll each Friday and cut it off on Monday, asking what you think about the upcoming week for the market. Are you bullish (believe the market will go up), bearish (believe it will go down) or neutral (neither bullish nor bearish)? I will then track the results on the message board. We'll find out if we are the "smart money" or the "dumb money".
That's all for today. Currently 70% G, 30% S fund. Until next time...
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. Input your email address in the form on the top
right of any page and you're in. 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 **.
Like
what you're reading? Tell
a Friend
about us.