The markets shrugged off a drop in consumer confidence Friday and the S&P 500 was up 0.7%. It is now 10.6% above the 200-day moving average. We are currently only down 3% from the high. It is not unusual to have an up day after a big down day in a correction, so Friday’s up move doesn’t change our impression that we are due for some more down days ahead.
I have been following the volumes and market internals, because I will call the bottom based on them rather than waiting for the Navigate the Stock Market (NTSM) analysis to call a bottom (unless NTSM calls a BUY first). I am doing this because our sentiment indicator never hit extreme values and that makes me believe that perhaps this will be a short, relatively small correction and we may do better to buy if there is a successful test based on market internals.
The Mutual fund industry reports inflow/outflows weekly. The latest ICI data for the week ending Wednesday, 2 Mar, showed $3.3B in outflows from US equity Mutual funds. $ had been flowing into mutual funds since mid-Jan so this is a reversal.
The fact that mutual fund inflows didn’t turn positive until January 2011 tends to make me believe that the market can go up after this correction is over; so I don’t think we are at THE TOP.
NTSM system is presently a HOLD.
