8/17/12
Stocks rallied yesterday finally breaking through the flat top we have watched for the last several days. The Dow gained 85-points moving above some resistance but ran into a little more.
[TABLE="width: 88%, align: center"]
[TR]
[TD="width: 241"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 193"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0036%[/TD]
[/TR]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] -0.13%[/TD]
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[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] 0.72%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] 0.93%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] 0.96%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
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[/TD]
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We have been patiently waiting for the S&P 500 to make some kind of move above or below the rising wedge pattern. The surprise was, the normally bearish rising wedge pattern broke to the upside. That leads us to wonder if it was a breakout or a fake-out? The May 1st highs are now being tested.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps of the Russell 2000 Index filled all of the recent open gaps and is now testing the neckline of what looks like a bullish inverted head and shoulders pattern.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar, which may be the clue to all of this, is still trading within the declining trading channel (red) and above the rising support (blue line). I won't be convinced of the breakout instocks until we see which way the dollar breaks. Stock will likely move in the opposite direction of the break in the dollar.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bond yields have been on fire putting a lot of pressure on bond prices and the F-fund. The 20-day EMA just crossed above the 50-day EMA. That's a good sign for the intermediate-term but it could be a short-term overbought sign for yields.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 200-day EMA is just above and that adds to the skepticism of the stock market breakout. I would be surprised if the yield on the 10-year Treasury can get above the 200-day EMA on its first attempt here. If the yields pull back, looks for stocks to take a break as well.
Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at TSP Talk Market Commentary
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