|
|
|
Fund share prices as of: 7/23/07
|
Today's Comments (Short Term Outlook)
Printer friendly |
|
Psychology
indicators mixed Stocks were mixed Monday as the Dow jumped 92 points, but small caps ended the day in the red. It goes along with the historical tendency we talked about yesterday where small caps lag the larger stocks in July. The S&P 500 gained back more than half of the losses it sustained on Friday and it now sits in an area that has been avoided. You can see below that over last week or two, it closed either within the larger trading range, or within the smaller trading range it started after the big breakout. What that means exactly, I don't know. It could be just a case of the 20-day moving average acting as support - but we could also see some resistance above in the 1545 area.  Chart provided courtesy of www.decisionpoint.com The TSP Talk Sentiment Survey System is on a sell signal this week after another 2 to 1 bulls to bears ratio. But the AAII Investor Sentiment Survey is just not telling the same story as it has been neutral to overly bearish for some time. Our system is based on our survey obviously, but which survey is correct? Here is another sentiment type indicator that looks at the options trading of the small trader (dumb money). These traders are buying call options (bets that the market will go up) at a rate that normally signals at least some short-term trouble for stocks. This indicator is at a seven year high, which gets my attention, but again this could be just a short-term concern and not something to worry too much about.  Chart provided courtesy of www.sentimentrader.com With August and September being two of the weakest months of the year for stocks historically, maybe this over-enthusiasm can help kick in a little break from the bull here. Trader Fred's TSP Trader System remains on a sell signal and it says the market remains in an area of weakness, which can indicate that stocks could struggle moving higher from here. Read Trader Fred's commentary of the system page. The EbbChart System is in the I-fund today. See where it is heading next on the ebbchart page. So the Ebbchart system is in stocks, but Trader Fred and the Sentiment Survey are telling us to stay cautious. Of course the Ebbchart is very active and can jump in and out of a position on a daily basis, while the other two, which are still considered active, do tend to move a little more slowly. This is where you need to decide what approach suits you better. Being overly aggressive can bring in the big bucks or put a hurt on your account. We've been seeing the former lately. But despite what some may say, active accounts, which all of our systems are, are less risky than a buy and hold strategy. I feel the buy and hold approach, which has worked very well the past few years because the market has just not come down at all, does expose your account to downward moves more so than an active account. Did you know that the TSP Talk Sentiment Survey System, which is up 13.7% this year, has actually been out of the market 58% of the time this year, and in just 42%. Coincidentally, that was the same ratio as last year when it was up 28% for the year. Think about that. That's all I have today. See you tomorrow. 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. 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.
|