08/23/11
Yesterday we saw another early morning rally fade quickly. The 200-point rally turned into a 37-point gain in the Dow by the close as either buyers shied away, or sellers stepped in. Volume was very light again as vacation time gets into high gear.
For the TSP, the C-fund added 0.02% yesterday, the S-fund slipped 0.13%, the I-fund was up 1.06%, and the F-fund (bonds) lost 0.12%.
On the positive side, we saw the lows holding up again, but the negative reversal day puts another black mark on an already weak chart. I think we could see the S&P 500 trade in a range of 1125 (maybe 1100) to 1200 in the next couple of weeks, and possibly not see any breakout or breakdown until after Labor Day weekend.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The NYSE is back under the -500 oversold level. In a bull market this would be an extreme oversold reading, but since we are "officially" in a bear market it is just plain oversold.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Rydex Cash Flow Ratio shows us that investors are still very bearish. It is still sitting near the extreme levels not seen since the lows of 2010 and surprisingly, they are more bearish than at the lows of the 2008-2009 bear market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
These are not surprising numbers after the recent sharp sell-off, but they are oversold and overly bearish enough to see some kind of a relief rally. But in a low volume, emotional market like we are in, I put more faith in chart patterns than indicators so while I am bullish in the very short-term and playing for a bounce this week based on the indicators, I am not exactly willing to bet the farm here for any length of time until the charts improve. It's a dangerous situation and if you get in stocks, I would stay nimble.
Thanks for reading! We'll see you back here tomorrow.
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.
Yesterday we saw another early morning rally fade quickly. The 200-point rally turned into a 37-point gain in the Dow by the close as either buyers shied away, or sellers stepped in. Volume was very light again as vacation time gets into high gear.
For the TSP, the C-fund added 0.02% yesterday, the S-fund slipped 0.13%, the I-fund was up 1.06%, and the F-fund (bonds) lost 0.12%.
On the positive side, we saw the lows holding up again, but the negative reversal day puts another black mark on an already weak chart. I think we could see the S&P 500 trade in a range of 1125 (maybe 1100) to 1200 in the next couple of weeks, and possibly not see any breakout or breakdown until after Labor Day weekend.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The NYSE is back under the -500 oversold level. In a bull market this would be an extreme oversold reading, but since we are "officially" in a bear market it is just plain oversold.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Rydex Cash Flow Ratio shows us that investors are still very bearish. It is still sitting near the extreme levels not seen since the lows of 2010 and surprisingly, they are more bearish than at the lows of the 2008-2009 bear market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
These are not surprising numbers after the recent sharp sell-off, but they are oversold and overly bearish enough to see some kind of a relief rally. But in a low volume, emotional market like we are in, I put more faith in chart patterns than indicators so while I am bullish in the very short-term and playing for a bounce this week based on the indicators, I am not exactly willing to bet the farm here for any length of time until the charts improve. It's a dangerous situation and if you get in stocks, I would stay nimble.
Thanks for reading! We'll see you back here tomorrow.
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.
