Coolhand's Market Analysis

There was little change in the Top 50's stock allocations this past week. But the Total Tracker showed some dip buying. Not a ton, but enough to show that some who are sitting in cash are looking for a chance to get back in. Here's the charts:



Not much change for the Top 50. They're holding mostly S fund and have a total stock allocation of 94%.




The Total Tracker saw an increase in stock allocations of 4.99%, going from a total stock allocation last week of 41.44% to 46.43%. There's still no shortage of non-believers in this rally.



The S&P remains firmly in that longer term upward channel, although the action has been mostly sideways for the past couple of weeks. RSI has dipped, as has the MACD, but both remain positive (especially RSI).



This chart depicts two things that I want to point out. I'm showing two envelopes around the 50 dma. Red and green lines are placed 6% and 8% (respectively) above and below that 50 dma. I'm only concerned with the lines above the 50 dma in this case. If we're going to see a blow off top, I'd expect price to enter that 6% to 8% range first. I've circled where those targets are in the upper left portion of the chart. As of Friday, the S&P would have to hit 1607.45 to enter that envelope. 1637.78 signifies the 8% target. Of course, those targets will change each trading day to some degree. But in any event, we're nowhere near those levels at this time.

The other indicator I'm showing is the StochRSI, which increases the sensitivity of RSI to generate more overbought and oversold conditions. Thursday's action last week pushed that indicator into an oversold condition. In this case, 0.2 is considered oversold. We may linger in this area for a bit yet, but I doubt it would be for long.

So the intermediate term remains positive, but it wouldn't take much more downside pressure to push it into a sell condition. And I'd not be surprised to see more downside just to take longer term traders out of position and bring the bears out of the woodwork again. But it's also the end of quarter. Couple that with high levels of liquidity and I would also not be surprised if we simply trek ed to fresh multi-year highs sooner rather than later. Even our sentiment survey for this week suggests higher prices coming this week as the bears outnumbered the bulls 50% to 40%.

It's tough for me to get overly bearish in this market environment.