11/14/12
What looked like a promising positive reversal day, turned into a negative outside day. The weak close shows the bears are in charge right now. The Dow lost 59-points on the day.
Because of the holiday, Tuesday's fund returns reflected the trading action of Monday and Tuesday. [TABLE="width: 88%, align: center"]
[TR]
[TD="width: 241"]
[/TD]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 153"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0150%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] 0.04%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -0.35%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -0.62%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.22%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The early action on Tuesday looked good. We had a sharp decline at the open followed by a strong reversal to the upside. But by about 11:00 AM ET, the indices ran out of steam, and as we headed into the close, the bears put on the pressure and we the bulls had no answer. As RevShark said in his Afternoon Commentary yesterday, we're not official in a bear market, but the action sure feels like it.
The S&P 500 closed just south of the 200-day EMA, but it's still right there. As we talked about yesterday, the problem is that all of the leading indices are already well below their 200-day EMA's.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transport held up better than most indices as it was only down 0.01%. It looks to be trying to hold above the October 25th low, which would create a high low after a recent higher high. It's a stretch, but it's something positive.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The VIX is lower now than it was a little more than 30 days ago, while the S&P 500 is more than 4% below where it was at that time.
Chart provided courtesy of www.sentimentrader.com
According to sentimenTrader.com, since 1986, there have been 100 days when we've seen a similar situation. Surprisingly, the S&P was higher two weeks later 70% of the time, a month later 61% of the time, three months later 72% of the time and six months later 75% of the time.
More from sentimenTrader.com: "
Many of these occurrences happened because the VIX was coming off of an extremely high level. When we see a panic, and fear jumps to exceptionally high levels, then in the aftermath we often see volatility expectations dampen even when stocks stumble in the short-term just because the overall level of volatility had already been so high.
If we restrict our search for precedents to those times when the VIX was below 20, then we only get three historical similarities - April 4, 1997, July 3, 2001 and April 22, 2002.
The first one led to awesome gains of more than +20% over the next three months; the latter two led to horrid losses of at least -14%. There isn't much of anything we can read into that."
If this is an omen of things to come, we can expect a big move in the indices over the next few months. However, the direction is in question.
The UUP dollar ETF popped above the 200-day EMA for the first time since August. I have my suspicion whether the rally in the dollar can continue without some kind pullback from the initial test of the 200-day EMA, and a test of the old resistance line (top red).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
That would be ammo for a relief rally in the stock market. If I'm wrong, the downside in stocks could get ugly.
We know that seasonality gets strong around the holidays but we have a few days of weak seasonality data to deal with first. Today is the 10th trading day in November.
Chart provided courtesy of www.sentimentrader.com
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
What looked like a promising positive reversal day, turned into a negative outside day. The weak close shows the bears are in charge right now. The Dow lost 59-points on the day.
Because of the holiday, Tuesday's fund returns reflected the trading action of Monday and Tuesday. [TABLE="width: 88%, align: center"]
[TR]
[TD="width: 241"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 153"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0150%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] 0.04%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -0.35%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -0.62%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.22%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The early action on Tuesday looked good. We had a sharp decline at the open followed by a strong reversal to the upside. But by about 11:00 AM ET, the indices ran out of steam, and as we headed into the close, the bears put on the pressure and we the bulls had no answer. As RevShark said in his Afternoon Commentary yesterday, we're not official in a bear market, but the action sure feels like it.
The S&P 500 closed just south of the 200-day EMA, but it's still right there. As we talked about yesterday, the problem is that all of the leading indices are already well below their 200-day EMA's.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transport held up better than most indices as it was only down 0.01%. It looks to be trying to hold above the October 25th low, which would create a high low after a recent higher high. It's a stretch, but it's something positive.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The VIX is lower now than it was a little more than 30 days ago, while the S&P 500 is more than 4% below where it was at that time.
Chart provided courtesy of www.sentimentrader.com
According to sentimenTrader.com, since 1986, there have been 100 days when we've seen a similar situation. Surprisingly, the S&P was higher two weeks later 70% of the time, a month later 61% of the time, three months later 72% of the time and six months later 75% of the time.
More from sentimenTrader.com: "
Many of these occurrences happened because the VIX was coming off of an extremely high level. When we see a panic, and fear jumps to exceptionally high levels, then in the aftermath we often see volatility expectations dampen even when stocks stumble in the short-term just because the overall level of volatility had already been so high.
If we restrict our search for precedents to those times when the VIX was below 20, then we only get three historical similarities - April 4, 1997, July 3, 2001 and April 22, 2002.
The first one led to awesome gains of more than +20% over the next three months; the latter two led to horrid losses of at least -14%. There isn't much of anything we can read into that."
If this is an omen of things to come, we can expect a big move in the indices over the next few months. However, the direction is in question.
The UUP dollar ETF popped above the 200-day EMA for the first time since August. I have my suspicion whether the rally in the dollar can continue without some kind pullback from the initial test of the 200-day EMA, and a test of the old resistance line (top red).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
That would be ammo for a relief rally in the stock market. If I'm wrong, the downside in stocks could get ugly.
We know that seasonality gets strong around the holidays but we have a few days of weak seasonality data to deal with first. Today is the 10th trading day in November.
Chart provided courtesy of www.sentimentrader.com
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
