08/12/11
We had another huge rally on Wall Street yesterday as the down / up / down / up pattern continued. The Dow closed well off of its high but still managed a 423-point gain. That was the 4th consecutive 400+ points move in the Dow; the longest streak ever.
For the TSP, the C-fund gained 4.64% yesterday, the S-fund was up 5.24%, the I-fund picked up 4.59%, and the F-fund (bonds) dropped 0.73%.
We are seeing some stabilization as the lows are holding, but we are seeing a possible bear flag forming. The bulls need to see a sharp break to the upside to break this bear flag pattern.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This chart below shows that insiders are buying Russell 2000 stocks at a rate not seen since the 2009 March bear market bottom. It was the eighth most extreme reading and while prior instances have not always led to market bottoms, they have led to strong short-term rallies.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The NYSE overbought / oversold indicator has moved well off of its extreme -1400 oversold reading. I do get a little nervous when this indicator goes from an extremely oversold to neutral or slightly overbought. Many times it can not get much higher - at least on the first try - during a declining market environment.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I have been asked how I could be looking for a rally considering all of the bad economic news of late. The answer is simply, I don't use the economic data to determine where to put my money. Markets go up, and markets go down, and whether you are in a bull market or a bear market, there will be good short-term opportunities to buy and sell.
I'm not saying that the U.S. is going to be the next Japan, but take a look at this long-term chart of Japan's Nikkei. This has been one of the worse bear markets in our lifetimes, but that does not mean that there were not buying opportunities.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This is the reason that I am not a believer in buy and hold. Very long-term bear markets and downtrends will eat your account balance. The Nikkei is down about 80% from its 1989-1990 highs. But using some basic market timing strategies gives you at least an opportunity to make money by taking advantage of certain situations. After all, we have to try to grow our accounts somehow while the market is oscillating.
The TSP Talk Sentiment Survey came in at 51% bulls, 41% bears, for a bulls to bears ratio of 1.24 to 1, which is still a buy signal, so the system's allocation remains 100% S-Fund for next week.
Thanks for reading! Have a great weekend!
We had another huge rally on Wall Street yesterday as the down / up / down / up pattern continued. The Dow closed well off of its high but still managed a 423-point gain. That was the 4th consecutive 400+ points move in the Dow; the longest streak ever.
For the TSP, the C-fund gained 4.64% yesterday, the S-fund was up 5.24%, the I-fund picked up 4.59%, and the F-fund (bonds) dropped 0.73%.
We are seeing some stabilization as the lows are holding, but we are seeing a possible bear flag forming. The bulls need to see a sharp break to the upside to break this bear flag pattern.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This chart below shows that insiders are buying Russell 2000 stocks at a rate not seen since the 2009 March bear market bottom. It was the eighth most extreme reading and while prior instances have not always led to market bottoms, they have led to strong short-term rallies.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The NYSE overbought / oversold indicator has moved well off of its extreme -1400 oversold reading. I do get a little nervous when this indicator goes from an extremely oversold to neutral or slightly overbought. Many times it can not get much higher - at least on the first try - during a declining market environment.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I have been asked how I could be looking for a rally considering all of the bad economic news of late. The answer is simply, I don't use the economic data to determine where to put my money. Markets go up, and markets go down, and whether you are in a bull market or a bear market, there will be good short-term opportunities to buy and sell.
I'm not saying that the U.S. is going to be the next Japan, but take a look at this long-term chart of Japan's Nikkei. This has been one of the worse bear markets in our lifetimes, but that does not mean that there were not buying opportunities.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This is the reason that I am not a believer in buy and hold. Very long-term bear markets and downtrends will eat your account balance. The Nikkei is down about 80% from its 1989-1990 highs. But using some basic market timing strategies gives you at least an opportunity to make money by taking advantage of certain situations. After all, we have to try to grow our accounts somehow while the market is oscillating.
The TSP Talk Sentiment Survey came in at 51% bulls, 41% bears, for a bulls to bears ratio of 1.24 to 1, which is still a buy signal, so the system's allocation remains 100% S-Fund for next week.
Thanks for reading! Have a great weekend!
