Coolhand's Market Analysis

It's been interesting to watch the contrast in stock allocations the past few weeks between the Top 50 and the herd. Taken at face value, the Top 50 were under invested during last week's huge market gains. Their total stock allocation was just under 30%. And all the S&P 500 did was tack on 7.47% for the week, while the S fund jumped 8.89% and the I fund gained 9.31%.

The herd on the other hand, was just over 60% invested in the market. They were the big winners overall.

This week both groups continue to move in opposite directions. The Top 50 has been increasing their stock exposure, while the herd has been taking profits.

But it's a little difficult to truly gauge what the Top 50 is doing when there is so much churn in the bottom half of that group. Price movement for last week was significant and resulted in many TSPers moving into or out of the Top 50 very quickly.

Here's how it all shakes out for the new week:




The Top 50 saw an increase in stock exposure from 29.86% last week to 41.76% for this coming week. That's a jump in allocation of 11.9%




The herd moved the other way, dropping their stock allocation from 60.33% to 49.49%. That's a drop in stock exposure of 10.84%.

My short term expectations for this market is one of weakness and selling pressure sometime this week. Our sentiment survey backs up that expectation with a solid sell signal too. And my Seven Sentinels also remain on a sell, but I'd not be surprised to see a buy signal initiated within the next 2 weeks. If we get that selling pressure, weakness could play out for several days before the turn. And the turn may not happen until the following week. Remember though, this is only my expectation. The EU and ECB (European Central Bank) are in play this week, and I suspect those events may be the catalysts that drive market prices.

I am 100% G fund at the moment, but ready to redeploy capital should lower prices present themselves.