5/09/12
After being down nearly 200-points before noon, the Dow rebounded and closed down "just" 76, but the other indices actually recovered an even higher percent of their early losses.
[TABLE="width: 500, align: left"]
[TR]
[TD]
[/TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD] - 0.41%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD] - 0.27%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD] - 1.20%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD] +0.11%
[/TD]
[/TR]
[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD] +0.004%
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Technically, the breakdown in the S&P 500 would have been very bearish, but the reversal day gives the bulls at least some short-term optimism. Unfortunately, this is really looking like at least an intermediate-term top being formed, particularly if a rally cannot get the S&P back above the 50-day EMA pretty quickly.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
You can see yesterday's reversal pattern more easily on this chart, and those kangaroo tails do tend to follow through over the next few days. But the lower low makes a new downtrend official.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq found support at the March low and there is an open gap above that needs to be filled, but like the S&P, we have a new downtrend here.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The smart money of the OEX put/call ratio is still bearish. Both the 10-day moving average, which I usually use, and the daily, went down sharply yesterday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This group below, of "semi-smart" money called Wall Street Strategists, is also pretty bearish, but one reason I say "semi-smart" is because they always have money in stocks. This group never has an average allocation of less than 50% in stocks as a group.
Chart provided courtesy of www.sentimentrader.com
The other reason they are semi-smart is because they are also wrong at market extremes. This 52% allocation in stocks is about as low as they go and the last few times this indicator was in this neighborhood, the market was near a bottom. This isn't an instant gratification indicator since as you can see, this chart covers a 15+ year period.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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