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Market Comments June 1, 2011 Current TSP Share Prices Twitter

Today's Commentary

Bad news ignored After the overnight futures pointed to a strong open, stocks did open higher on Tuesday morning, and despite a mid-day swoon, the indices closed near the highs of the day.  The Dow gained 128-points.                                 For the TSP, the C-fund was up 1.06% yesterday, the S-fund gained 1.14%, the I-fund picked up another 1.44% with the help of a weak dollar, and the F-fund (bonds) added 0.11%. The month finished strongly, but could not quite move into positive territory.  Here are the final returns for the month of May and the yearly tally through the end of the month.                     Despite a series of more weak economic data, stocks rallied again yesterday and I can only imagine what the bears are thinking.  Coolhand wrote about this in a recent blog as he too gave up on trying to make sense of market direction as it pertains to the fundamentals.  S&P 500 broke to the upside of its bullish flag pattern on Tuesday, and as we talked about yesterday, it could be ready for a run to a new high.  But looking further out I am concerned heading into the dog days of summer where a correction is very possible.  For now, this looks bullish.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The NYSE is overbought and the +700 level has been an area that has stalled some recent rallies, and we are just about there.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk I have remained nervously bullish lately because of the excessive bearishness from investors.  Here is yet another indicator showing that pessimism.  "Small traders" are buying call options (bullish bets) at a very low percentage of total options.  Over the last several years when we see this number go below 30%, the market was at, or near, the start of another push higher.                                                                         Chart provided courtesy of www.sentimentrader.com From SentimenTrader.com: "The table below shows how S&P performed after the other times since the bear market low in 2003 that the S&P was within 3% of a 52-week high but small trader call buying dropped under 30% of their total volume. Not surprisingly, it was mostly positive during the intermediate-term." - Jason SentimenTrader.com                                                                                                          Chart provided courtesy of www.sentimentrader.com The May jobs report will be announced on Friday morning and estimates are looking for a gain of 220,000 jobs, and an unemployment rate of 9.0%.  The rumor on Wall Street yesterday was that the number of jobs gained may be a lot higher than expected, and that probably had something to do with yesterday's rally.  Perhaps we'll see a "buy the rumor, sell the news" reaction? Thanks for reading!  We'll see you back here tomorrow.   Click here to discuss today's Market Commentary Tom Crowley

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