02/09/12
Stocks overcame some early losses as the buyers continued to jump on any weakness thrown their way. It was another very slow day as the Dow ended the day up 6-points.
For the TSP, the C-fund was up 0.25% yesterday, the S-fund added 0.15%, the I-fund gained 0.28%, and the F-fund (bonds) picked up 0.03%.
What can we say that has already been said about this chart?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The market leader Dow Transportation Index, was down yesterday and is now testing the 20-day EMA again, and it has also broken below the main rising support line. This 20-day EMA test is important since the next level of support is quite a way down. We'd expect that whatever happens here, the S&P 500 will follow a few days behind.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Although we have not seen too much bullishness in our sentiment surveys, surveys tell us what people say they are doing with their money. With the relentless rally still going strong we'd expect investors to be quite bullish so why the surveys are not showing that, I don't know. Perhaps they are using a little reverse psychology.
This Rydex Asset Ratio tells us what people are actually doing with their money and it shows that they (investors in general) are currently quite bullish. They are investing heavily in bullish mutual funds as opposed to being in cash or bearish funds.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The ratio is closing in on levels only hit 3 other times in the last 3+ years, and each time the market was near at least a short -term top, and in the case of the highest reading in May of 2011, the S&P 500 is still trying to get back to where it was back then.
We could see a double top pull back if and when the S&P hits that May high, but in the case of the Nasdaq, the other market leader, it cut through last year's highs without a fight...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So that is yet another sign of strength for the market.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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