The Santa Claus rally continued on Wednesday and we still have a couple of days of strong seasonality ahead of us. Will seasonality be able to overcome the extreme overbought, overly bullish readings we are seeing?
The S&P 500 closed right up against resistance and is just below the 50-day exponential moving average. There are so many obstacles in the way for the market right now, and we'll just have to see if the strong seasonality can overcome these obstacles.
Volume should be light again today so I wont trust today's action too much. Monday is the 2nd trading day in January and it is one of the strongest days of the year for the market historically , being up about 70% of the time. That means it has been down 30% of time so it is not a slam dunk, particularly in this bear market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The NYSE overbought/oversold indicator moved up to a level only seen one other time in 2008. But rather than looking at just the 750 reading, I am looking at the prior patterns of a consolidating overbought reading (over 0), followed by a blow-off push higher to the 500-level, before the market really fell apart.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We are seeing that pattern now and you have to be somewhat concerned about this.
As far as sentiment goes, the put / call ratios are getting into the area of extreme bullishness, which is not typically a good sign for the market. The interesting thing is that both the dumb money and the smart money put/call ratios are at overly bullish levels. Usually the smart money is fading (doing the opposite) of the dumb money.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
One possible theory why the smart money is looking bullish in the options market is that they may selling calls rather than buying puts. That may skew the ratios making the OEX put / call ratio less effective. But that's just a theory. It's just rare to see all three of these indicators going in the same direction.
Speaking of sentiment, we are implementing the new rules for the TSP Talk Sentiment Survey System this month. Take a look at the sentiment system page for more info. I will explain it more next week after I finish going over all of the 2008 numbers and convert them into the new system. I have just been swamped lately so I'll do it this weekend. Bottom line is that the system starts out 2009 on a sell signal, and a 100% G fund allocation.
I posted the following on Wednesday but I will keep it posted for those who have been on vacation:
We are offering a one week only, holiday special 20% discount on the annual subscription prices to help out our 2009 returns.
If you have been been considering subscribing to one of our premium services, now is the time to act. The sale prices end after January 7. Click here for more info, or click here to get started and enjoy immediate access.
If you already subscribe to a month to month service and would like to convert to the annual to take advantage of the discount, send me an Email and I will help with the conversion.
If you are already an annual subscriber and would like to take add a year to your service with the discounted price, also Email me so we can handle that for you.
That's all for today. Thanks for reading! Have a great weekend, and we'll see you here on Monday.
The S&P 500 closed right up against resistance and is just below the 50-day exponential moving average. There are so many obstacles in the way for the market right now, and we'll just have to see if the strong seasonality can overcome these obstacles.
Volume should be light again today so I wont trust today's action too much. Monday is the 2nd trading day in January and it is one of the strongest days of the year for the market historically , being up about 70% of the time. That means it has been down 30% of time so it is not a slam dunk, particularly in this bear market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The NYSE overbought/oversold indicator moved up to a level only seen one other time in 2008. But rather than looking at just the 750 reading, I am looking at the prior patterns of a consolidating overbought reading (over 0), followed by a blow-off push higher to the 500-level, before the market really fell apart.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We are seeing that pattern now and you have to be somewhat concerned about this.
As far as sentiment goes, the put / call ratios are getting into the area of extreme bullishness, which is not typically a good sign for the market. The interesting thing is that both the dumb money and the smart money put/call ratios are at overly bullish levels. Usually the smart money is fading (doing the opposite) of the dumb money.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
One possible theory why the smart money is looking bullish in the options market is that they may selling calls rather than buying puts. That may skew the ratios making the OEX put / call ratio less effective. But that's just a theory. It's just rare to see all three of these indicators going in the same direction.
Speaking of sentiment, we are implementing the new rules for the TSP Talk Sentiment Survey System this month. Take a look at the sentiment system page for more info. I will explain it more next week after I finish going over all of the 2008 numbers and convert them into the new system. I have just been swamped lately so I'll do it this weekend. Bottom line is that the system starts out 2009 on a sell signal, and a 100% G fund allocation.
I posted the following on Wednesday but I will keep it posted for those who have been on vacation:
We are offering a one week only, holiday special 20% discount on the annual subscription prices to help out our 2009 returns.
If you have been been considering subscribing to one of our premium services, now is the time to act. The sale prices end after January 7. Click here for more info, or click here to get started and enjoy immediate access.
If you already subscribe to a month to month service and would like to convert to the annual to take advantage of the discount, send me an Email and I will help with the conversion.
If you are already an annual subscriber and would like to take add a year to your service with the discounted price, also Email me so we can handle that for you.
That's all for today. Thanks for reading! Have a great weekend, and we'll see you here on Monday.
