Now I sweat it out.
Sometimes my indicators get me very bullish. Other times very bearish. I'm actually neither right now but somehow I find myself sitting 100% in the G fund after yesterday's transfer.
I am looking for another solid year for the market before the year is up but I am playing for a short term pullback. I might consider this excessively defensive considering there is no strong sense of urgency to get out of stocks. Just a mildly overbought condition with some sentiment indicators telling me the market could be setting up for an exhale. The main reason is because, of the 3 legs of the market, the psychology and monetary conditions are getting wobbly. Only valuation is still solid (when S&P 500 earnings yield is compared to the 10 year treasury yield). A nice pullback could patch the psychology leg for us, and we will count on the Fed to work on the monetary conditions.
I just don't have a lot of solid evidence to show you. If I had to pick two, one would be the NYSE overbought/oversold indicator.
Chart provided courtesy of
www.decisionpoint.com
As I said, it is mildly overbought, not excessively. But with the two wobbly legs I mentioned, we may not reach excessive levels before we see weakness.
The other interesting development lately is the weakness in the Dow Transportation index. Usually a good indicator of the shape of the economy. Truckers, trains and delivery services are usually the first to notice a slow down. So while the S&P 500 has been hanging tough lately, the Dow Transports have started to weaken.
Look how similar these two charts are. That is until the last week or so. The S&P 500 is first, then the Dow Transports...
Chart provided courtesy of www.decisionpoint.com
The PMO indicator in the middle of each of the above charts shows us the Dow Transports gave a sell signal yesterday. The S&P has not ... yet.
So I don't have much to give you. Just some tidbits that lead me to believe the market needs a rest. We have been slowly climbing the wall of worry lately, something the bulls can rightfully hang their hats on. That's what I would be saying if the market acted this way when my indicators were bullish. But since they are not, I look at it as struggling to make new highs. It may be a sideways consolidation, but I don't think that will be enough to get the psychology leg back into shape. It needs the market to suffer more damage before that will happen. The question is, will it happen now or will we have to wait a few more weeks? I'm playing it safe.
That's all for today. Currently 100% G fund. Until next time...
Sometimes my indicators get me very bullish. Other times very bearish. I'm actually neither right now but somehow I find myself sitting 100% in the G fund after yesterday's transfer.
I am looking for another solid year for the market before the year is up but I am playing for a short term pullback. I might consider this excessively defensive considering there is no strong sense of urgency to get out of stocks. Just a mildly overbought condition with some sentiment indicators telling me the market could be setting up for an exhale. The main reason is because, of the 3 legs of the market, the psychology and monetary conditions are getting wobbly. Only valuation is still solid (when S&P 500 earnings yield is compared to the 10 year treasury yield). A nice pullback could patch the psychology leg for us, and we will count on the Fed to work on the monetary conditions.
I just don't have a lot of solid evidence to show you. If I had to pick two, one would be the NYSE overbought/oversold indicator.
As I said, it is mildly overbought, not excessively. But with the two wobbly legs I mentioned, we may not reach excessive levels before we see weakness.
The other interesting development lately is the weakness in the Dow Transportation index. Usually a good indicator of the shape of the economy. Truckers, trains and delivery services are usually the first to notice a slow down. So while the S&P 500 has been hanging tough lately, the Dow Transports have started to weaken.
Look how similar these two charts are. That is until the last week or so. The S&P 500 is first, then the Dow Transports...
Chart provided courtesy of www.decisionpoint.com
The PMO indicator in the middle of each of the above charts shows us the Dow Transports gave a sell signal yesterday. The S&P has not ... yet.
So I don't have much to give you. Just some tidbits that lead me to believe the market needs a rest. We have been slowly climbing the wall of worry lately, something the bulls can rightfully hang their hats on. That's what I would be saying if the market acted this way when my indicators were bullish. But since they are not, I look at it as struggling to make new highs. It may be a sideways consolidation, but I don't think that will be enough to get the psychology leg back into shape. It needs the market to suffer more damage before that will happen. The question is, will it happen now or will we have to wait a few more weeks? I'm playing it safe.
That's all for today. Currently 100% G fund. Until next time...
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