04/01/13
Stocks moved higher again on Thursday, wrapping a great month and first quarter for the stock market. The Dow gained 52-points on the day with similar percentage gains (.3% to .4%) in the S&P, small caps, and international stocks. [TABLE="align: center"]
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[TD="align: center"] Daily TSP Funds Return
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[TD="align: right"] G-Fund:
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[TD="align: right"] +0.0163%
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[TD="align: right"] F-fund:
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[TD="align: right"] -0.03%
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[TD="align: right"] C-fund:
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[TD="align: right"] +0.41%
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[TD="align: right"] S-fund:
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[TD="align: right"] +0.42%
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[TD="align: right"] I-fund:
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[TD="align: right"] +0.35%
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Here are the final TSP fund numbers for the month of March and for the end of the 1st quarter:
The S&P 500 broke out to a new all time closing high on Thursday, which is normally a good development, but being 124-points above the 200-day EMA is quite extended.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The index is back above the intermediate-term resistance line, which has also been an extended area. At the same time, the PMO indicator snuck back into a buy signal, but its pretty flat with no significant sign of a breakout signal.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The new high brings with it some concern since this will not be the first attempt for the S&P 500 to push above the 1570 area, and the prior attempts all failed miserably - each resulting in a 50% haircut.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Is the S&P 500 now a better value than it was during the other two times it hit 1560? Probably, but does it justify a gain of over 140% since the 2009 low? The economy, while improving slowly, isn't a heck of a lot better than it was just a couple of years ago. Some say the Fed is fueling a new bubble. Could be, but the charts should give us some warnings.
I mentioned the following in the Weekly Wrap Up also, but thought it was worth mentioning again...
SentimenTrader.com pointed out what happened the last time this rare event of a new all-time high that took 10 years to happened...
Chart provided courtesy of www.sentimentrader.com
From sentimenTrader.com: "We certainly wouldn't suggest that a new high in the S&P is a bearish development. This is more of a caution against getting caught up in the moment, without regard to what's happened before under somewhat similar circumstances."
So, it is not a common occurrence, and two of the three prior instances saw almost immediate major corrections from those highs, while in 1980 the S&P rallied for several more months before peaking, but even then, the S&P 500 saw some sharp short-term pullbacks leading to that peak. I think some caution is warranted here.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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