Thread: Market Talk / August 27 - September 2

Stocks: August Doldrums Setting Up September Fireworks

Stock markets have been trading sideways for months now and this has turned the average investor quite bearish -- exactly what you want to see if you're a contrarian investor. Since the May high (April in NASDAQ), stocks have seen a sharp correction and a rebound to near old highs. At the same time, sentiment has gone from overly-bullish to persistently overly-bearish on our short term option trader gauges. Longer term investors are now growling bears who point to everything from a "tapped-out" consumer to terrorism fears as reasons to avoid the stock market.

This is exactly what a contrarian investor should be taking as a good sign that the market is forming a long term low and buying opportunity. Historically, this is the pattern of sentiment that is seen at bottoms. And, typically, this kind of sentiment backdrop is followed by gains of 50% and more in the broad market. Examination of the following chart should be instructive -- see if you can spot the buying opportunities:

http://marketclues.blogspot.com/

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Looming over the market is a mounting debate among strategists and economists over whether the United States is heading for a gradual economic slowdown, or a full-fledged recession, especially after weaker home sales this week.

Ill wait for the NASDAQ to drop another 2% and then I am back in. With the trading delay, I am just not fast enought to swim with the big fish

Find a place where the water is just right, just deep enough to provide the lift you need. Beware of falls! D

Edit: Back on topic, it looks like a difficult week. Lot's of statistics are updated this week so mood could shift day to day. I'm staying in my 40% so let's hope the news is good!

The Dow's up 60 pts but I'm not trusting this rally. The volume is very light and it is Monday morning. It could turn on a dime.

Originally Posted by tsptalk

The Dow's up 60 pts but I'm not trusting this rally. The volume is very light and it is Monday morning. It could turn on a dime.

Looking at todays IFT list, alot of money coming out of the G and F fund for tomorrows play. Alot of bets on the I fund. This could be interesting to see if this is a contrarian indicator for a head fake or the real deal. .

If the market holds - we currently have a new all-time high on the DJUA at 441.97. That bodes well for the intermediate future. Snort.

I suspect the market will move too quickly this week to try to time our TSP moves. One thing for sure: The market will always keep us off balance. The last week of August, normally very weak, starts off with a bang.

Reminds of the week between Xmas and New Years last year. Historically one of the strongest weeks of the year. In 2005 it was pretty bad. You never know.

Again with the low volume trading, any hint of bad news will turn this ship around pretty quickly. Remember, there is a new jobs report coming out this week (Friday).

NASDAQ has some more room to move up before hitting some major resistance. Sure would be nice to see a repeat of the first week of Nov 2005, while no one is suspecting it.

http://bigcharts.marketwatch.com/int...sp?symb=NASDAQ

The Kingdom of TSP
Daily Edition
August 28, 2006 Closing

Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Pro-Yak....................................Socks rally as storm turns north and lube pulls back!

Con-Yak...................................Still the season!

Jester-Yak................................Whew!!

Doodles:
Socks [$SPX] Closed at..............1301.73, up +6.69
Volume (CMF) (money flow).........+0.108, increasing.
Averages (MACD) (trend)............+9.148, increasing.
Momentum (S-STO) (signal).........86.34, increasing.
Strength (RSI) Overbought/sold....[70] 63.10 [30]

Lube (NYM) Closed at..................70.61, dn -1.90
Oil Markers................................<70= ok, 70-75= worry, >75= panic.

Tea Leaves:
Charts & Stuff............................Green / Yellow [doodles +5-0 / Lube > 70]

Tin Box:
Position....................................100% socks.
Stops [$SPX].............................Alert: 1289. Trail: 1276.

S&P SPDRS (AMEX: SPY) Pull Back From Resistance

August 28, 2006

The exchange-traded fund S&P Depositary Receipts SPDRs (AMEX: SPY) briefly touched a critical resistance level at $130.43 last week and then pulled back.

While the SPDRs have been stronger than the rest of the market, this resistance level is crucial to the continuation of the current advance. The SPDRs must make a decisive close above this level in coming days. If they do traders can expect a rally to challenge the prior May 2006 highs. If not, we are likely to correct at least to the $127.00 level in coming days.