TSP Talk Blog

Stock were all over the place yesterday but when it counted, the bulls took charge and the major averages closed strongly to the upside to the tune of about 2.5%. There seemed to be some late money going to work on the bullish side the last two days, which is a good sign - but here come the tests.

The swings remain violent and unless you are a day trader (trading several times a day) you are probably sitting by watching this like a deer caught in the headlights, because we don't know which way to turn.

The S&P 500 rallied up to the resistance area so the upside will be a little tougher from here. If 896 can be penetrated on the upside, we could have ourselves the start of a nice Santa Claus rally. However, if the S&P decides to go below 815 instead, the recent low, then we're more likely to see a test of the prior lows and then the support lines below.


Chart provided courtesy of www.decisionpoint.com

The overbought/oversold indicator is slightly overbought. The "dumb money" put / call ratios (CBOE and Equity) are starting to get near the declining overly bullish resistance area (bearish for stocks), and the smart money put / call ratio (OEX) is getting a little more bearish (slightly bearish for stocks).


Chart provided courtesy of www.decisionpoint.com

We just had a 270 point gain in the Dow, followed by a 170 point gain, yet it is still down 230 points for the week. The sell offs can be brutal and with the indices peeking back toward being overbought, it is prudent to remain cautious.

Today is the 4th trading day of the month and after the first week in December, seasonality turns a bit negative for a couple of weeks.

This thing can go either way so be careful out there.

That's all for today. Thanks for reading. We'll see you here tomorrow.