9/26/12
The stock indices opened higher yesterday but by afternoon trading they were sinking fast. The Dow saw a 101-point loss and the tech and small cap stocks were hit even harder.
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[TD="align: center"] Daily TSP Funds Return[TABLE="width: 157"]
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[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0036%[/TD]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] 0.12%[/TD]
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[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -1.04%[/TD]
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[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -1.48%[/TD]
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[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.55%[/TD]
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The S&P 500 fell below the old resistance, turned support, line. What looked like a bull flag turned into a break to the downside instead and will now look to the 20-day EMA for support. The 20-day EMA held during the prior tests back in August. Is it time for something more severe, or will this bull market find support and rally again? The bears have their chance to put pressure on stocks but we'll see if the bulls are buying this dip.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index fell back down toward the bottom of its 4950 - 5250 trading range. The 50-day EMA had now fallen below the 200-day EMA so that actually puts the Transports in a bear market - based on TSP Talk's definition. Not a good sign from the leader.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps of the Russell 2000 were hit hard losing 1.5% yesterday and it is now testing the 20-day EMA and the bottom of the steep ascending trading channel.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The NYSE is on the oversold side of the neutral overbought/oversold indicator for the 1st time in September. During strong bull markets this may be all we see - unless this market is making a turn for the worse.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar may be on the side of stocks. It has produced a bear flag and it looks like the 21.80 area could be forming a possible flat top. That could change today with a positive close, but if the bear flag breaks downward - as bear flags normally do - stocks could get some assistance.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Monday will be the first trading day in October. Let's take a look at October's historical seasonality chart:
Chart provided courtesy of www.sentimentrader.com
There is the October 1987 crash skewing things but overall it's not that bad - except for what is probably options expiration week, which is also when we get into the thick of the 3rd quarter earnings reports. One thing we may notice is that every day seems to be all or nothing; There are several sharp up biases and downward biases. It could be a roller coaster month.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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