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| Today's Commentary (Short Term Outlook) |
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A day of rest After Monday's surge higher, Tuesday was a day of rest for the indices as the Dow shed 47-points, and the TSP stock funds were mixed as the C and I funds were both down about 0.25%, while the S-fund picked up a small gain. The F fund (bonds) was flat. Although the S&P 500 closed down, it first put in a higher high reaching up toward resistance, and that resistance line just keeps moving higher and higher, doesn't it? With the 20-day EMA above the 50-day EMA, and the 50-day EMA above the 200-day EMA, we have a pretty solid foundation for the rally in the chart. The 20-day EMA has held again during this recent pullback, and until it is broken (which, who knows, could be today) we shouldn't be surprised to see bullish results. I still believe that 20-day EMA was going to hold on its first test regardless, but based on some other indicators, could fail if we see another test in the coming days. We'll see.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Volume picked up for yesterday's breather, but not very much. The PMO has been on a sell signal for a few days, the MACD is not really giving us too much to worry about, and the indices are just slightly overbought. If you recall, we had a pretty bearish TSP Talk sentiment reading last week, 39% bulls, 49% bears, so a little rally this week is not much of a shock. The OEX put/call ratio (actual one day ratio, not a moving average) showed that the smart money is very bearish right now. This daily reading can reverse in a day, but as of right now, the 2.18 to 1 put/call ratio is the most bearish reading since November of 2007, where it went over 3.0 to 1.   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The 10-day moving average of the put/call ratios show us that the dumb money (CBOE and Equity) remains firmly bullish (a contrarian sign / bearish for stocks), although off their highest levels, while the OEX smart money is flirting with multi-year bearish readings (bearish for stocks.)  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk This throws some uncertainty into the mix. The S&P chart looks fantastic right now so going against the uptrend is swimming upstream, but some of the technicals are starting to weaken and we could be due for short-term pain. Your investment style will help you determine your plan of attack. Buy and hold investors will simply hold and put their faith in long-term market gains. Short-term market timers may think about taking some profits if they are still in stocks. Intermediate-term timers may wait for the chart to show evidence of a break down. This approach will keep you in the market longer grabbing most of the gains you can, but you will be dragged down before you get out once the tide turns. It is a personal choice and we all have different thresholds for pain when taking losses or missing gains. The 3rd quarter comes to an end today. It's been quite a run and how money mangers handle their accounts today to "dress up" their portfolios for their quarterly reports is a big question mark. It could be an active day, or an outright dull day depending how they act. One thing for sure; trading before and up to Friday's jobs report will be tentative, but with the quarter behind them, they may get a little more aggressive (buying or selling) on Thursday. Last day: Scribbler's TSP & Economic report has changed from a twice weekly report, to a daily report. Because of this the price of the subscriptions will be going up beginning Oct 1st. This will NOT affect current subscribers. Both monthly and annual subscribers will lock in the old prices when renewed, as long as their subscriptions remain active. More info. That's all for today. Thanks for reading! We'll see you back here tomorrow. |