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Where's the extremes?

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by , 03-06-2013 at 09:37 PM (1100 Views)
3/07/13

Stocks advanced again as the bulls remain in charge. The Dow gained another 42-points while the bears can only watch.
Daily TSP Funds Return
G-Fund: +0.0043%
F-fund: -0.16%
C-fund: +0.14%
S-fund: +0.26%
I-fund: +0.17%
The S&P 500 is still pushing the old support line, which is now acting as a rising resistance line.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Yesterday gave the S&P a 2nd close above the overhead longer-term trading channel resistance line. As I have said many times, I like to give breakouts or breakdowns at least 3 days to confirm the move.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Some of my favorite indicators are sentiment-type indicators whether it's a survey, or looking at where investors are putting their money, or what traders are doing with options, etc., etc.

This list from sentimenTrader.com shows many of these type of indicators and comparing their current readings to those of the 2000 and 2007 market tops.


Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk

Despite my call for a top being formed, these indicators do not show much in the way of extreme sentiment reading. Only 2 of the 17 are more extreme then the 2000 and 2007 tops, while 10 of the indicators are actually less extreme. 5 show no advantage or are not clear.

These are not the numbers I would expect to see near a market top, and that is probably why stocks have remained buoyant. As many of you know, our TSP Talk survey says our readers are also too bearish despite new highs and that has kept the sentiment system in stocks for about a month now. Kudos to those brave enough to follow it. I have to admit, I was not a fan of the current buy signal and it has cost me.

The dollar has been rallying and surprisingly that has not held stocks back. It may be too early to say whether this is a decoupling of the inverse correlation between the dollar and stocks, but we knew that could happen one day.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The strong dollar will always put pressure on the I-fund, but right now the C and S funds are doing just fine despite the rally in the dollar, although the gains might be even larger if the dollar started to pull back again.

Tomorrow we get the February jobs report. Estimates are looking for a gain of about 170,000 to 180,000 jobs, and an unemployment rate of 7.9%.

Thanks for reading! We'll see you back here tomorrow.

Tom Crowley


Posted daily at TSP Talk Market Commentary

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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