Stocks pulled back yesterday giving the Dow and S&P 500 their third straight day of losses. The Dow lost 78-points but it had been a triple digit loss earlier in the day.
For the TSP, the C-fund lost 0.71% yesterday, the S-fund fell 1.02%, the I-fund gave up 0.39%, and the F-fund (bonds) added 0.04%.
Since this rally started in December, 2 to 3 day dips have been buying opportunities, so is that what we have here, or is this the start of something a little more serious? The trend is still up, and even if we see a test of any of the lower support levels, the losses would be quite moderate. Of course if support fails, then we have a different situation to deal with. Perhaps an actual pullback of 5% or more??
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There are still plenty of bears out there, and according to our Sentiment survey, probably enough to keep the rally going. The TSP Talk Sentiment Survey came in at 35% bulls, 56% bears, for a bulls to bears ratio of 0.63 to 1. That is another buy signal in this bull market which means the system will remain 100% S Fund for next week.
This tells me that we probably won't see any significant damage in the near future, and a little selling here is not a bad thing as long as that support holds.
The market leader, Dow Transportation Index, had another poor day yesterday, losing over 2% on the day. The recent rising support line and the 20-day EMA were broken, but the index found at least temporary support at the 50-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So far it's not too much to be worried about, but we'll want to keep watching. The losses were troubling because it happened despite the price of oil dropping over 1% on the day. I was assuming that the Transports were lagging because of the rising price of oil, but yesterday did not support that theory.
The NYSE is now on the oversold side of the overbought / oversold indicator. During a bull market, the -500 area tends to be an area where we might see a bounce.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The March seasonality chart has been a pretty good indicator so far. The second half of the month is generally weaker than the first half, and as if on queue, the market started to pullback as we heading into the second half this week.
Chart provided courtesy of www.sentimentrader.com
I don't put too much weight on the daily readings, but today is trading day #17, and according to the chart, we could be setting up for a little 1 or 2 day rebound, although the strength in those green bars isn't exactly overwhelming like we during the first half of the month.
Thanks for reading! Have a great weekend!
Tom Crowley
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