Today's Comments (Short Term Outlook)

Resistance, overbought, and too much bullishness Stocks stalled yesterday after Friday's big rally, but there are some reasons, which we have been watching.  The three TSP stock funds were off fractionally (-0.2% to -0.4%) while the F-fund was up 0.4%. Even if this is a new bull market, it may need to take some time off to work off some of the extreme readings before breaking through resistance.  As I wrote about yesterday, the S&P 500 and Nasdaq are up against both long-term and short-term resistance and it make take something extra, maybe news-wise, to get a breakout.  Today we have an FOMC meeting on the schedule but there are not any surprises expected from the Fed.  But a surprise may be the something extra the market needs, otherwise look for that long awaited pullback to start materializing.                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Did you see that the 50-day EMA and the 200-day EMA are now both at 943?  This could very well be a good bullish sign for the long-term, although not necessarily great for the short-term. I often talk about the put / call ratios as a sentiment reading for excessive bullishness or bearishness.  One of the three put / call ratios that we watch is the CBOE equity ratio and its 10-day moving average is now at a level not seen since the top of the bull market in 2007.  This is an indication of extreme bullishness from "the herd", who are not usually correct when at extremes.                                Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk There is certainly reasons for the herd to be bullish, but that is rearview mirror thinking right now, as they are trying to capitalize on what has already happened.  You can see above that the 10-day moving average was down much lower just a few short weeks ago, when we had that minor pullback in early July.  But since then the bullishness has been skyrocketing.  I like all of the things I have seen from the market regarding the technical analysis; the S&P 500 breaking above the 200-day EMA, the 50-day EMA now being equal to the 200-day EMA, the new higher highs being made, etc., but we may have come too far for now.  Like I said, the market may need some outside influences to help it move up from here, otherwise I'd expect a little pullback in our near future. That's all for today.  Thanks for reading!  See you back here tomorrow!