Finally.

The market finally broke out of its doldrums.  Unfortunately for those still in stocks, the breakout was to the down side.  The Dow was down 166 points and the S&P 500 lost over 1%. 

I have been humbled by the market so often that I dare not claim any sort of victory by anticipating more of a pullback.  Who knows?  The market could rally strongly today.  That's not what my indicators tell me, but we never know.

If we are still comparing this market to 1994, then we may expect a swift move down.  The pullback was severe in '94 but it only lasted 7 days, bottoming near the prior low.  If that happens this year we're looking at a move to 1150 for the S&P 500.


                         Chart provided courtesy of www.decisionpoint.com 


If we use the 2004 chart as a comparison, it was also a severe pullback but it lasted six weeks and made new lows...

Of course I am speculating that we will get a continued pullback but as I mentioned, the humbling market is going to do what it is going to do, and not necessarily what my indicators say it is going to do.  I'll take it day by day watching those indicators as well as keeping an eye on the price of oil, what Greenspan has to say next week, and what kind of earnings warnings we see.

Did you get the new TSP Talk Sentiment Survey in the mail?  If not, see below on how to sign up.  I didn't want this to sway your answer but here is the new "dumb money" sentiment survey from the AAII.  Notice there were fewer bears (18%) than any time since late December 2004, just before the consolidation started...





                       Chart provided courtesy of www.decisionpoint.com 

That is the way this works.  At the bottom there are few bulls and a lot of bears (over 40% in early May).  As the market rises, slowly those bears turn bullish until we hit a number like 18% bears where the rally runs out of steam.  The timing isn't always perfect but leaning in the opposite direction of "the herd" when the numbers get extreme can put you in stocks near the bottoms, and out near the tops.

That's all for today.  Currently 100% G fund.  Have a great weekend!


Administrative Note:  I have started the TSP Talk Weekly Sentiment Survey which will be a poll sent via email each Friday asking you one question;  Are you bullish, bearish or neutral for the market in the coming week?  If you want to be a part of this, click here ... Join the Weekly Sentiment Survey and input your email address.  When the confirmation page comes up, there will be two boxes on the left side.  One to join the Weekly Survey, and one to join the email alert list.  Choose the box of the list you wish to be added to.  If you are already on the email alert list, or you would like to be, you will need to check both the Email Alert and the Weekly Sentiment Survey box.  Thanks!