12/01/11
First off, I lost my internet connection Wednesday night in the middle of getting the reports together so I spent a lot of time debugging that. Turns out the cable company will need to come and check out the lines on Friday. In the meantime, I lost a lot of time and I had go to the laptop, which I hate typing on, so I will try to make this quick.
Stocks rallied powerfully yesterday on a combination of solid economic data, China cutting its reserve-requirements, and of course central banks taking action on Europe’s debt crisis. The 490-point gain in the Dow was the 7th largest ever, but percentage-wise it was more like the 97th best.
For the TSP, the C-fund rallied 4.34% yesterday, the S-fund jumped 5.08%, the I-fund was up 4.42%, and the F-fund (bonds) lost 0.09%.
Yesterday's rally not only saw the S&P 500 break above the 20, 50, and 200-day EMA's, but it also pushed the index to the top of the big old bull flag that I almost gave up on. It may be that the pre-holiday sell-off was the fake-out we had been looking for in the triangle formation last week.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar also gave us a fake-out when the normally bearish rising wedge formation broke to the upside during the holiday trading, then did what a rising wedge is supposed to do, which is break to the downside. This was part of the catalyst for stocks and commodities rising yesterday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We have a couple of conflicting reports from sentimenTrader.com. The first one shows a negative very short-term outlook. The S&P has jumped +4% on the last day of a month only 3 other times since 1928. The next 2 days showed a return of -14.7% (November 1929), -1.8% (May 1931) and -4.3% (October 2008).
On the positive side, this is just the 10th time the S&P 500 has managed to rise 3 straight days from at least a one-month low, gaining more than +7% in the process.
Chart provided courtesy of www.sentimentrader.com
It sounds like today could be a coin flip, but the November jobs report comes out on Friday, and it may determine the direction of the market for the following couple of days. Estimates are for about 123,000 jobs being added, and an unemployment rate of 9.0%.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
