Coolhand's Market Analysis

No pullback yet, but I still have Monday as part of my original target time frame for it to happen. But while I've been waiting, our sentiment survey flipped to a sell for next week. That's the first sell signal for that survey since late December and effectively extends the window for possible weakness all the way out to next Friday. And its accuracy last year was certainly high enough to give it heavy weighting in assessing short term risk. So much so that I sold my 30% stock allocation today and now sit 100% in the G fund. That's not the way I expected the new month to start out with respect to burning my IFTs, but risk management isn't just a concept either.

Stocks started out of the gate on a strong note, thanks in large part to today's payroll report. In that report, March nonfarm payrolls were up 216,000, while private payrolls increased by 230,000. Both numbers were higher than economists expected. Not surprisingly, the unemployment rate dipped from 8.9% the prior month to 8.8%. It was anticipated that the rate would remain unchanged.

Among other data points, the March ISM Index came in at 61.2, which was just a bit lower than the 61.4 that was forecast. A 1.4% drop in February construction spending was double the decline that was anticipated.

In addition to the data, it was the 1st of the month and the market yet again followed a familiar pattern by closing in the green to begin the new month. This in spite of oil climbing to a new 2 year high above $108 a barrel.

After today's action the Seven Sentinels painted a more bullish picture than the one we saw yesterday. And it was darn bullish. Let's take a look:



Up and up and up. Need I say anything else?



Same here.



TRIN flipped back to a buy, while TRINQ remained on a sell.



More upside for BPCOMPQ, but it's a bit extended now over that upper bollinger band. Yes, it can remain above it for some time, but in a "normal" market it suggests a short term, overbought condition.

So 6 of 7 signals are in buy mode, which keeps the system in a buy condition.

I continue to believe the longer term is up as indicated by the Seven Sentinels system, but I am still playing for some short term weakness. However, since the same forces are still in place that propelled this market higher since last September, looking for a decline may not be the right strategy. But that's why each of us has to assess our own risk tolerance and make an individual decision of what path to take.

See you later this weekend when I post the Tracker charts for the new week.