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Fund share prices as of: 8/22/07
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Today's Comments (Short Term Outlook)
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Looks
good - Is it? The market got a boost from its old friends, mergers and acquisitions. The Dow was up nearly 150 points yesterday closing near the day's high. That is a good sign. It gets better. After the close, Bank of America announced a deal they are making with Countrywide and the futures immediately jumped out of their seats to the upside. We have seen before that overnight futures can turn around by morning so I'm not going to declare victory for stocks just yet. The S&P 500 is now above the 200-day moving average - that's one. We're looking for 3 or more. Yesterday's high came right up against some overhead resistance but if the market opens as high as the futures indicate, it should take that out pretty easily. The next problem will be the 50-day moving average where the last rally failed a couple of weeks ago. Keep an eye on the 1480 area.  Charts provided courtesy of www.decisionpoint.com The NYSE is now overbought and any gains from here "should" be tough to hold onto - unless this rally is the real deal. Getting a "V" type bottom is very rare after a 10% or more correction. We've had a nice rally off of the bottom and I suspect there will be profits taken in the next day or two. We'll have to see if the market can hold the opening gains for any length of time. The one thing the market has going for it is that many people are expecting another leg down, or at least a test of the prior lows - and we know the market like to do what is least expected. The extraordinary turnaround we are seeing is a rare event. We saw something yesterday that has only happened one other time. Jason Goepfert from www.sentimenTrader.com will explain this unique event. "One thing that I do think is interesting is that my quote vendor is showing that more stocks on the NYSE hit a new 52-high today than hit a new 52-week low. This is remarkable, since it was less than a week ago that more than 30% of all stocks were sitting at fresh yearly lows.
"Historically, it typically takes one to two months for new highs to overtake new lows after seeing such an extreme number of lows. Over the past 40 years, I can find only one other time period when new lows made up at least 30% of the total stocks traded, then within two weeks, highs outnumbered lows.
"That occurred on 10/08/81, which is interesting since it happened
after a multi-year bull market, then a month-long 14% drop in the
early fall. After that October 8th date, the S&P lost about 5% over
the next couple of weeks, then went on a two-month-long 10% rally
before rolling into a more severe decline." Fred's TSP Trader System remains on the sidelines (F-fund) and continues to show that recent gains may be tough to hold onto. See what Trader Fred has to say today on his system page. The EbbChart System has continues to play this rally well after missing much of last week's drop. It is in the I-fund today. See what ebbnflow has to say today on the ebbchart system page. I'm looking for the market to start to give back some gains either later today or tomorrow. If I am wrong, we will be seeing 3 closes above the 200-day moving average and would mean I may have to rethink our short-term double bottom theory, and start to embrace a "V" bottom possibility. That's all for today. I am currently 100% F fund. See you tomorrow. Have questions? Visit our message board for answers.
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