07/01/13
I remember back in the 70's when a radio disc jockey in New York would play a popular song, and when it was over they'd announce in a colorful voice, "Instant Replay!", and then they'd play the same song a second time.
Well, I'm going to do an "Instant Reply" to the start of Friday's commentary, with just minor changes...
It was another triple digit move for the Dow on Friday. That's 5 triple digit moves in a row. 13 in the last 14 trading days. 16 of 20 the trading days in June. And 19 triple digit moves in the last 24 days. On Friday the Dow lost 115-points. High volatility is generally a warning sign.
[TABLE="width: 88%, align: center"]
[TR]
[TD="width: 305"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 157"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0142%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] +0.15%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -0.43%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -0.18%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.50%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The other indices didn't put in quite the percentage change that the Dow did. Wall Street apparently just wanted to keep the triple digit streak alive.
The S&P 500 is below major resistance, below the 50-day EMA and SMA (simple moving average), it has created a bear flag, and Friday's action took it below a small rising wedge. Not a great setup.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer-term comparison to 1987 is still viable, although the recent bounce has lasted longer than it did in 1987. But the formation is still intact.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I will keep posting this until the pattern either breaks or we crash, but I won't dwell on it as much since it has been playing out for a couple of weeks now.
The QQQ is the Nasdaq 100 ETF, which represents the largest tech stocks in the U.S. market. Although it actually closed higher on Friday, it too is struggling below the 50-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Do you know how I like to give a breakout / breakdown 3 to 5 days to confirm the move? Well, the QQQ has now closed below the 50-day EMA for 7 straight days. Of course a big rally would change this, but as of now, this is a confirmation. You can see that the Nasdaq 100 fell below the 50-day EMA twice before in April, but notice how quickly the QQQ went back above the EMA. Those were false breakdowns where this 7-day breakdown may be the real deal.
The longer-term bonds had an interesting day on Friday. The TLT put in positive outside reversal day closing up 0.7%, but that outside day also happens to be part of a bearish bear flag. There's still a lot of resistance overhead so the affect of the positive outside reversal day is questionable.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds yields are of course doing the opposite. The 30-year Treasury yield put in a negative outside reversal day, but it is part of a bull flag, which would be bullish for yields (bearish for bonds and the F-fund).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here's another look at the July seasonality chart, where you can see there are a some pockets of both historical strength and weaknesses during the month.
Chart provided courtesy of www.sentimentrader.com
Seasonality is not a major indicator. It is more like a breeze while you're playing golf. You want to pay attention to it because it may affect how hard you have to swing, or where you aim, but it won't be the only determining factor of the direction of your ball. Although some seasonal patterns are stronger than others, such as around Christmas time. Early July's positive bias is a good one, but there are no guarantees of course.
Administrative Note: Starting this week, we have a new service for you. Don't worry, it's free for a while. Some of you may know our forum member Coolhand, who has been posting and writing blogs in the forum for us for nearly 9 years. He has started a weekly report in the premium service area, which is and available to everyone who has created a premium service login. You will have to login to view the reports.
At some point in the future, and we are targeting January 2014 as the start date, "Coolhand's Market Analysis" will become a full service, daily subscription based premium service. If you don't have a login to the premium area yet, here is how to create one: Create Account. If you need help, please read FAQ #1... How do I sign up? or watch this quick instructional video. If you have an account, just login - www.tsptalk.com/members.
Also: The Ebbchart Premium Service will retire at the end of July so we won't be taking any new subscribers, or renewing monthly subscriptions come July 1. All current subscribers will have access through July 31, but we won't be charging any more renewal payments.
I want to thank ebbnflow for his years of dedicated reports and service. It has been a pleasure working with him. He is moving onto another endeavor and I wish him the best of luck!
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.
