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Coolhand's Market Analysis

More of the Same?

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I really thought the market was going to do better last week than it did. All three TSP stock funds closed with weekly losses, and it was the S fund that led the way again.

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The S&P 500 has traded in a range for the better part of 3 weeks now. It tested its previous all-time high early in the week last week, but fell back by week's end. Still, it's in the middle of its range so it wouldn't take much for it to retest that line of resistance once more. Momentum continued to weaken even as price has been resilient.

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The DWCPF came close to testing support at the 50 dma once more on Friday. Momentum is still falling.

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The EFA closed out last week with a modest loss, but after the previous 2 week run higher, that's not a surprise.

I'm still bullish, but it's obvious this market has some issues to work out. My intermediate term system remains positive, but is under pressure. Banks are also under pressure, but the BKX has not fallen apart. Liquidity still favors the bulls very much. Cumulative breadth has been tracking sideways, but is technically bullish.

Sentiment is constructive to bullish. TSP Talk saw its collective bullishness get tempered a bit for the new week, which is good, but it's only a neutral reading. NAAIM remains solidly bullish and I tend to try to align with them. The options are leaning bearish for Monday, so the beginning of the week may see yet more weakness.

I'm still looking for the S&P 500 to break resistance to the upside, which should carry the rest of the market. But the indicators appear to be stuck in neutral. That makes me think we may see another shot lower to draw in more bears before another push to the upside to test resistance on the S&P 500. That may happen Monday. If it does, maybe the train will finally leave the station.

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S&P 500 (C Fund)
DWCPF (S Fund)
Dow Jones U.S. Completion Total Stock Market Index (^DWCPF)
EFA (I Fund)
iShares MSCI EAFE Index (EFA)
AGG (F Fund)
iShares Lehman Aggregate Bond (AGG)