Market Talk / Nov. 27 - Dec. 3

[Spaf]

The Kingdom of TSP

Sunday-Weekly

Early Edition

Kingdom News, Doodles, Tea Leaves, & Yak Date: Nov. 27, 2005


Kingdom News.

Kingdom Talk:. Market at 4 year high.

5 weeks up.

Elsewhere:.... The Jestor spoke: Bubble bubble, eye the candle in the far, trend and trouble, the rising of the evening star?


Doodles, and Tea Leaves - Weekly, and ending.

Doodles:
S&P 500 (Index)
Closed at.................... 1268.25, up +19.98 for the week.
CMF (money flow) at...... +0.366, up + 0.147 for the week.
RSI (strength) at............. 74.6, up + 6.6 for the week; [O.B.=70, O.S.=30].
MACD (trend)...... bullish
S-STO (signal)..... -------
P-SAR (signal)..... bullish
ROC (change)...... bullish

Light Crude (NYM)
Closed at............ 58.71, up +2.57 for the week.

Attachment:. S&P (4mo) chart ending 11/25. Added:S-STO, 20dMA, P-SAR, and RSI.

Tea leaves:................... Green / Yellow*


Yak.

Remarks:................... Holding 100/0 (100-0 / 0-0-0).
Stops (C:S&P):............ Alert: 1256, Trailing: 1244.
*Yellow caution: to far to fast without correction, RSI=O.B.

Lube Markers:.............. <64 = ok, 64-69 = worry, >69 = critical.

Weekly TSP Returns:...1 Wk : G=+.01, F=+.05, C=+.22, S=+.30, I=+.03
2 Wks: G=+.02, F=+.08, C=+.42, S=+.53, I=+.33

 

[Skip]

imported post

Read this from IBD for another opion... Everyone has one ...lol

Skip


Dour Crowd So Wrong It's Right; Market Has Rallied for6Week AS_AD('Middle1'); //-->

BY KEN HOOVER
INVESTOR'S BUSINESS DAILY
Posted 11/25/2005
"When everyone thinks alike, everyone is likely to be wrong," legendary stock market sage Humphrey Neill said decades ago.
It's a timeless paradox: When the crowd is certain stocks can only go lower, the market goes higher. And when everyone is giddy with optimism, the market is likely ready to take a costly tumble.
Investors should focus their attention on the price and volume action of the major market averages and leading stocks.
The market bottomed on Oct. 13, then followed through with a strong gain on good volume Oct. 19. It signaled further strength on Nov. 2 and 3.
Still, sentiment indicators do help provide a fuller picture of how the market is doing.
So what is the mood of investors now that a solid-looking rally is more than one month old?
Earlier this month, an indicator created by market strategists at Citigroup signaled one of the highest levels of pessimism since 1994, when the market was about to start a powerful bull market. Investor gloom is even deeper than after 9-11 or just prior to the Iraq War in March 2003.
"On of the reasons is that even though 9-11 was a huge shock to everyone, in many instances people just hung on. It was too late to sell," said Citigroup strategist Tobias Levkovich.
The indicator is called the Panic/Euphoria Model or the Other PE.
Each year, Levkovich and his colleagues sort through 60 indicators of market sentiment. They pick the eight with the best predictive records over the past 18 years and mold them into the Panic/Euphoria Model.
By doing this, Citigroup aims to address a common shortcoming with psychological indicators: A particular gauge may spot market tops or bottoms for a while, then stop working.
The model's current sentiment indicators are:
• Margin debt.
• Nasdaq volume as a percentage of NYSE volume.
• Retail money flows
• Put/call ratio.
• CRB futures index.
• Gasoline prices.
• Short interest ratio between public and NYSE member firms.
• The average between the Investors Intelligence and American Association of Individual Investors.
"It's dangerous to rely on just one factor," Levkovich said.
The weekly composite indicator hit a low of -0.87 on May 6, just as the market was starting a rally that would last until August. It bottomed again at -0.83 on Nov. 4, right after the market moved decisively higher, reconfirming the current rally.
The lowest reading ever was -0.88 on July 15, 1994, just before the start of a huge bull market.
Levkovich won't give away many details of how the indicator is constructed except to say that five of the eight components are contributing to the buy signal.
It's not hard to identify some of them.
Key Bullish Levels Triggered
The put/call ratio hit 1.07 on Oct. 12 and 13, just as the market was hitting bottom. Readings over 1.0 occur when investors are buying more bearish puts than bullish call options, which tends to happen near intermediate market bottoms. It hit 1.18 on Oct. 14, 2004, just as a year-end rally was getting under way, and 1.22 this year on April 15, days before the start of a rally.
Nasdaq volume has also been moderate as a percentage of NYSE volume. When investors feel confident, they're more likely to trade in speculative Nasdaq names. When they're scared, they tend to stick with stable NYSE stocks.
The CRB futures index, a measure of the prices of a basket of commodities, and gasoline prices don't seem like psychological indicators at first glance. But Levkovich insists they are.
"When people are buying high prices at the pump, they feel kind of lousy," he said.
And rising commodity prices are a sign of a recovering economy, he added.
One perplexing sentiment indicator is the Investors Intelligence weekly poll of investment advisers. A staple of market watchers since 1963, the poll hasn't signaled a prolonged period of bearishness among newsletter writers since 1994. There hasn't been more bears than bulls since October 2002.
John Gray, Investors Intelligence editor, said he now considers a bullish reading when the spread between bulls and bears gets down to 12 or 15 percentage points. He says there's too many bulls when the number gets to 55% or 60%.
Its last low was Oct. 28, when there were 44.8% bulls and 29.2% bears. The current reading is 53.1% bulls and 29.1% bears.
Some popular sentiment indicators are absent from Levkovich's model, including the closely watched CBOE volatility index, known as the VIX. He says it's lost its predictive power because of professional hedging strategies and the increased use of exchange-traded funds, or ETFs, which decrease volatility.
Confirming Citigroup, another sentiment gauge, the State Street Investor Confidence Index, gave its lowest reading in October going back to 1998. The index has rebounded this month.
The State Street index seeks to track the movement of institutional money into and out of stocks. It shows that institutions are as subject to crowd psychology as anybody else.
The index's lowest reading until now was October 1998 when Russia defaulted on its debt and a big hedge fund collapsed, threatening some banks. But it was the exact right time to be ready to put money into the market.
But not everybody's sentiment index is flashing a big buy signal.
Tim Hayes maintains his own composite index for Ned Davis Research and it shows a moderate amount of optimism. It's a more short-term indicator that moved quickly from showing modest pessimism. It's given six buy and six sell signals since the end of 2003.

 

[Birchtree]

imported post

Skip,

That was an excellent read from IBD, thanx for posting it. Remember when stocks looked like a sure thing to most people - 2000. Now that place has been taken by real estate, and many people now see stocks as inherently risky and dangerous. And you know what - keep them thinking negatively. The fewer bullish participants the longer the climb upward.

Dennis

 

[Birchtree]

imported post

I'm looking at a graph of stocks vs. yen. Japan's stock market has soared as its currency has weakened. Wondering what the S&P will do when the dollar starts giving back a little? The Nikkei stock average looks to be up over 22% and the yen has depreciated approximately 15%. These currencies seem to run in cycles.

 

[Birchtree]

imported post

Today I will thank Muhammed that the EWP (Elliott Wave) hasn't turned bullish yet - they probably won't until deep into 2006. The price action is still inside the Rising Wedge and a Rising Wedge is a Bearish pattern. The most likely break from such a pattern is south. Rising Wedge broke below the lower line in October with a false break. The strong up move in November most likely has its source in that false break. It was an excellent topping pattern and break that would have encouraged many short positions. (The shorts are bordering on toast).

The present up move is well above the Bull control lines and has the momentum of a genuine up break if it continues above the upper containing line of the wedge on good volume, there may well be a Bullish break. However, as it stands there is still no breakout of the Rising Wedge. (Follow the rising sun). The larger Elliott patterns are still in agreement with the Bearish Rising Wedge and Bearish final outcome.

The intraday price action has no topping pattern, nor the typical bar overlapping in any time frame that is suggestive that the up move has come to an end. The last 5 weeks on the S&P is the strongest up move since December 2003. Momentum is indicative of trend, thus it is short term Bullish.

Yes'em, to be a Bear or not to be a Bear that is the question.

 

[robo]

imported post

Skip,

I agree with Birchtree nice article... The point I was making is I personally get cautious when the Herd gets this bullish. However, I'm a consevative investor even during Bull Markets.... I think it's important to point out one must be cautious after a big run up, not everone on the board is raging bulls.... Some are baby bulls like myself.... I agree the trend is still up, but watch out as we get close to 1300's and the end of the year....



Tom wrote in is comments:

Can it be this easy?

Can being in stocks right now be this easy? Obviously not for those of us on the sidelines but doesn't it seem like everybody, save present company, is bullish? That's not usually healthy for the short term. Just don't tell the market that. It seems to be on autopilot.

Comment from a Tech:

General Public Polls
Last week, LowRisk reported 79% Bulls in their poll and 0% Bears. I can't find another instance of such readings. We came close once with 76% Bulls in July of 2000. In that instance, we pulled back a bit, and then rallied higher still the following week. Other instances of less excessive Bullishness resulted in more significant pullbacks. There were no instances since the start of my data set (5/97) of ANY 0% readings. All Bearish readings lower than 15% resulted in some sort of correction and many of the lower readings brought significant corrections within a couple weeks. The one thing I noticed was that OFTEN the market would push higher first and also a week or so later to form the more important top. The take away? This is a very important early warning, but we can probably expect to see higher prices after a 1-3% correction. AAII reported 57.33% (vs. 53.63%) Bulls and 16% (vs. 21.79%) Bears. This is very Bullish and warrants some short-term caution. Remember that excessive Bullish readings can and often will persist for some time going into more important tops. The really high Bullish readings can bring a (possibly sharp) pullback, but real tops usually come well after such Bullishness. Investors Intelligence reported a rise to 53.6% (vs. 53.1%) Bulls, and a rise to 23.2% (vs. 22.9%) Bears. This is still showing plenty of Bullishness, but this is likely early

A nice read if you are a CONSERVATIVE INVESTOR.....


http://cyclicaltrader.com/blog/

 

[Birchtree]

imported post

Robo,

You've gone and done it now - that web site is a gold mine. Thanx a lot. My feet are starting to dance under my desk - I'm trying to contain myself and enjoy my relief level - take the Dow above 11,722 and I'm exploding into optimism. I think I'll vacation at the House of the Rising Sun - if its not under water. Take care.

Dennis-perma bull #2

 

[robo]

imported post

Birchtree,

Your welcome....

robo

 

[grandma]

imported post

Friday at 1pm Greg said:When the share prices come out tonight, the I-fund will be down 7 cents.

Greg !!!:i - how-a-bout giving us the tip BEFORE our COB????

 

[Birchtree]

imported post

During this mother of all bull runs it will be prudent to keep an eye on the S&P MACD.

The current series of lower tops on the S&P MACD is suggesting that after this up move stops, that there is a high risk of a downdraft. Unless the MACD now breaks to the upside and creates a new up trend past its resistance line, this up action could end dramatically fast. This is only the second time in 10 years that we have had this deteriorating MACD pattern. I'm staying in up to my eye balls. The Ark is ready.

 

[JOVARN]

imported post

The headline reads



An 11K kind of day?


Dow could reach mark not seen since '01 as futures point up on holiday shopping, lower oil.
November 28, 2005: 7:13 AM EST



Good luck to all. I moved to the G for a breather. I bought the S&P at 1177 and I am ready for a break.

The busiest shopping days of the season are the 12[suP]th[/suP] thru the 18[suP]th[/suP]. I might wait until then to jump in. I also may just follow the chart Tom posted this am and make a quick purchase between the 1[suP]st[/suP] and the 4[suP]th. [/suP]Why fight history.

I am off to the treadmill to get rid of the Pie I have been eating for the past few days. But I have to take the clothes of the treadmill before I can use it.

The horses are on the track.

Again. good luck to all.

 

[The_Technician]

imported post

Hmmm....down 1.44%....wonder if we're getting that downdraft today........:shock:

My lord we should....this thing is so overbought for the short term its overflowing....!!!

:dude:

 

[FUTURESTRADER]

imported post

The Technician wrote:

Hmmm....down 1.44%....wonder if we're getting that downdraft today........:shock:

My lord we should....this thing is so overbought for the short term its overflowing....!!!

:dude:

looks like it Tech, but i'm thinking (hoping?), today may actuallly put inlow of a few day consolidation, before continued strength...in which case, today would be a (the) buying opportunity

 

[The_Technician]

imported post

I wouldn't get too trigger happy at the moment....the Funds could drop 10% here in the next week due to all the "Great news" coming out about the economy.....

:dude:

 

[Skip]

imported post

Time to move to the G fund.. 100% cob today...

Wedesday my systems swing trade fired a sell and today the default also fired a sell on the sp500... So I listen...

the default however still has a buy on the DOW.. Could be its all merks fault today ?

I'll be in again soon as the pull back won't last to long.. Waiting for the green light again... :^

Skip

 

[ATCJeff]

imported post

The Technician wrote:

I wouldn't get too trigger happy at the moment....the Funds could drop 10% here in the next week due to all the "Great news" coming out about the economy.....

:dude:

I agree. It's time for the market to take a step backwards. We have come to far to fast. I went 100% F fund at cob today. The only thing that has me concern is the continue drop in energy cost. I paid $1.90/gal today at wally world.

Jeff

 

[Wheels]

imported post

It looks like my one day move into the I fund paid off. I moved back 100% into the S fund for tomorrow. I noticed many of you are getting out until the pullback is over. I am hoping that today IS the pullback. Sure would be nice to get 2 or 3 in a row correct. It would definitely be the first time this whole year.

Dave

<><

 

[JOVARN]

imported post

I agree. It's time for the market to take a step backwards. We have come to far to fast. I went 100% F fund at cob today. The only thing that has me concern is the continue drop in energy cost. I paid $1.90/gal today at wally world.

Jeff

West Palm Beach FL we are still paying $2.56/Gallon for midgle grade.

I would have went back in today but I was playing internet poker and lost track of time. I think all the hype about retail sales is fixed. I was at the mall and did not see large crowds. The news keeps running the same clips of the Wallmart shopper getting knocked down. I think when the dust clears sales will be under projections.

Whats up with the I fund? Gold is sky rocketing could this be the signal the I fund has been waiting for? is the dollar going to fall. Warren Buffett hopes so I know that.

He can afford to take a hit now and then

 

[Greg]

imported post

The I-fund should be down 3 cents.

 

[tsptalk]

imported post

Wheels wrote:

It looks like my one day move into the I fund paid off. I moved back 100% into the S fund for tomorrow. I noticed many of you are getting out until the pullback is over. I am hoping that today IS the pullback. Sure would be nice to get 2 or 3 in a row correct. It would definitely be the first time this whole year.

Dave

<><

Nice call Dave. Looks like the dollar is trying to form a top. Playing the I fund may be the play.Japanhas sure been on a roll. How long can that continue?