For the TSP, the results were mixed on Monday.  The C-fund added 0.08%, the S-fund fell 0.83%, the I-fund slipped 0.03%, and the  F-fund (bonds) was up 0.08%. 

The S&P 500 was up for the 5th consecutive day, but the gains were modest at best and a little consolidation is certainly healthy after the biggest weekly gain in along time. 

I am getting a little concerned with what I will call a rising "F" formation.  It's similar to a flag, but a bull flag normally has the pennant portion tilting downward, not up.  This is the third "F" we've seen since the market peak in April and the first two did not turn out so well.

                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The NYSE was getting overbought and a pullback or sideways action in the short-term would help.  There is still a lot of overhead resistance and if the S&P 500 is going to try to make a break back above the 200-day EMA, it is going to need its strength so again, a little break here is fine.


                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Last week we took the TSP Talk Sentiment Survey and because the survey was taken after a big rally, the sentiment was rather bullish considering the technical damage that had been done to the indices.  That bullishness gave us a little pause as it was actually a sell signal since the 50-day EMA has gone below the 200-day EMA. 

The AAII Survey was taken the day before, and the results were much different.  The survey participants were were quite bearish (57%) to the point of hitting a level not seen since the March 2009 market low.  You can see below that when the bearish percentage starts hitting the mid-50's, we could be setting up for at least a short-term rally.


                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Of course we may have already had that short-term rally as the S&P 500 was up 5.5% last week, so how much more the market will see out of this overly bearish condition remains to be seen.  The indicators I showed yesterday (see below) tell us we could see more bullish action, so I am leaning that way.

After the close we saw some decent earnings reports and we received preliminary news about the successful capping of the gushing oil well.  In early overnight trading, the futures reacting positively, but have since pulled back.

The recent decline in stocks may have been a result of the uncertainty of the Financial Regulation bill negotiations.   We are now getting word that the Fin-Reg bill may have enough votes to pass in the Senate, and while the bill itself may or may not be great for business, just getting by that uncertainty may be a positive for stocks to continue with a relief rally.  "Sell the rumor, buy the news?"

Thanks for reading.  We'll see you back here tomorrow.

Tom Crowley