09/14/11
Despite one of the tighter trading ranges we have seen in a while, it was still another wild ride on Wall Street as far as the indices resolving whether they wanted to be up or down on the day. The bulls won the battle and the Dow closed up 44-points.
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The S&P 500 held above the rising support of the bear flag, and the neckline of the head and shoulders pattern we highlighted yesterday. There is some descending short-term resistance just overhead now, right about where the 20-day EMA is, so this is a little test for the recent 2-day rally.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Something is going to have to give, the support below or the resistance, and this bear flag is getting a little long so I still think we will see a test of the lows some time this month.
Let's talk about sentiment. The last AAII Sentiment Survey (not our survey) taken last week, came in with a bull to bear ratio of 0.75 to 1. That is a pretty bearish reading, which would be bullish for stocks, but over the last few years we have seen this ratio move down below 0.50 to 1 and almost each time that has proven to be a good short-term, and in some cases longer-term, buy signal. It is not quite there yet and not every pullback gets below 0.50 to 1.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Smart Money Index is derived by comparing the first half hour of trading against the last one hour of trading. The first half hour is considered more emotional, less sophisticated money, where the last hour is consider smarter money. When the late money outperforms the early money, this smart money index moves up. When the early money outperforms the late money, this index moves down.
Chart provided courtesy of www.sentimentrader.com
We are seeing a sharp spike higher recently in the smart money index. This sounds like a bullish sign, and it can be in the short-term but as you can see, the smart money index peaks near near market bottoms, and bottoms when the market is near a top. So the move up is a start, but it means that the smart money believes we are closer to a top than a bottom.
This is a long-term indicator and probably has little meaning on what happens in the next few days or weeks, but for the next several months or years, the smart money seems to be indicating that we are more likely to move down, than up.
Despite one of the tighter trading ranges we have seen in a while, it was still another wild ride on Wall Street as far as the indices resolving whether they wanted to be up or down on the day. The bulls won the battle and the Dow closed up 44-points.
For the TSP, the C-fund was up 0.94% yesterday, the S-fund led the way with a gain of 1.65%, the I-fund rallied 0.97%, and the F-fund (bonds) lost 0.22%. |
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The S&P 500 held above the rising support of the bear flag, and the neckline of the head and shoulders pattern we highlighted yesterday. There is some descending short-term resistance just overhead now, right about where the 20-day EMA is, so this is a little test for the recent 2-day rally.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Something is going to have to give, the support below or the resistance, and this bear flag is getting a little long so I still think we will see a test of the lows some time this month.
Let's talk about sentiment. The last AAII Sentiment Survey (not our survey) taken last week, came in with a bull to bear ratio of 0.75 to 1. That is a pretty bearish reading, which would be bullish for stocks, but over the last few years we have seen this ratio move down below 0.50 to 1 and almost each time that has proven to be a good short-term, and in some cases longer-term, buy signal. It is not quite there yet and not every pullback gets below 0.50 to 1.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Smart Money Index is derived by comparing the first half hour of trading against the last one hour of trading. The first half hour is considered more emotional, less sophisticated money, where the last hour is consider smarter money. When the late money outperforms the early money, this smart money index moves up. When the early money outperforms the late money, this index moves down.
Chart provided courtesy of www.sentimentrader.com
We are seeing a sharp spike higher recently in the smart money index. This sounds like a bullish sign, and it can be in the short-term but as you can see, the smart money index peaks near near market bottoms, and bottoms when the market is near a top. So the move up is a start, but it means that the smart money believes we are closer to a top than a bottom.
This is a long-term indicator and probably has little meaning on what happens in the next few days or weeks, but for the next several months or years, the smart money seems to be indicating that we are more likely to move down, than up.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Tom Crowley
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
