02/10/12
Yet another flat day on Wall Street as the Dow gained 7-points; the second single digit move in a row. Some are saying that the lack of a rally after positive news out of Greece and another strong employment report, is a sign of weakness, but the bulls are still clearly buying the dips.
For the TSP, the C-fund was up 0.15% yesterday, the S-fund added 0.01%, the I-fund gained 0.33%, and the F-fund (bonds) lost 0.15%.
As if subliminally sensing how burned out I've become repeating the same commentary over and over during this relentless rally, RevShark gave me a copy of his Thursday night Newsletter, which he normally posts on his website, SharkInvesting.com, to share with our readers. Thank you, sir.
So, here's RevShark:
It was more of the same today [Thursday]. Despite early indications for a flat start to the day, another better-than-expected jobless claims reading and talk of a progress towards new Greek austerity measures helped stocks open with modest gains. For the second day in a row, though, traders faded the positive open, sending the indices into negative territory. However, the dip buyers once again stepped up to the plate, grinding the market off lows to a close that was just off the best levels of the session.
Under the surface, there was some interesting action to note. Solars (which continue to face stiff structural headwinds like low demand and decreasing subsidies) were the go-to group for hot-money traders looking for action. AAPL, meanwhile, must have gotten a dose of adrenaline, as the market-darling rocketed higher by 3.5%.
I bring this up because the action in solars could be an indication that traders are starting to do a little barrel bottom-scraping, and the action in AAPL (which pushed the stock well past its upper Bollinger band and past the upper reaches of the ascending channel that’s been in place for nearly two years) smells a little like a blow-off (dare I say it?) top. Generally, a surge that takes a stock past its upper b-band at the start of a move is considered to be bullish, but is considered to be a warning sign when it happens after a strong move. AAPL is up 35.7% since Nov 25.
Those two items are merely worth noting as we move forward. We’ll only know if they meant something in hindsight.
Finally, I don’t know of anyone who isn’t hoping for some sort of consolidation in the near-term, but there is an interesting statistic to consider. Since the beginning of the year, the S&P 500 is up 7.5%. Over the past 50 years, there were 13 instances when that index was higher by more than 5% going into the Friday before the Feb OPEX week. Over the next four days (Fri - Wed), the S&P 500 was 10 -3 for an average gain of 1.13%. Only two of the advancing periods showed gains of less than 1%, while the three losing weeks showed modest declines of 0.91%, 0.61% and 0.07%.
-- RevShark
Thanks again Rev.
Our Sentiment Survey came in at 49% bulls and 42% bears for a ratio of 1.17 to 1, for a bulls to bears ratio of 1.17 to 1. That is yet another fresh buy signal in a bull market which means the system will remain 100% S Fund for next week.
Thanks for reading! Have a great weekend!
Tom Crowley
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