09/15/11
Stocks continue to ride the volatility rollercoaster and it seems to be picking up steam. The Dow quickly sank over 100-points in early trading as the on-again, off-again support for a Greece bailout hit the headlines.
The on-again won the battle and it looks like Greece will stay in the Euro-zone, despite default remaining a good possibility. The Dow rallied nearly 400-points from bottom to top yesterday, before a late sell-off took away half of the day's high gains, but the Dow still closed up 141-points.
For the TSP, the C-fund was up 1.35% yesterday, the S-fund gained 1.74%, the I-fund added 1.15%, and the F-fund (bonds) ticked up 0.01%.
The volatility is even worse than you see during the day. On Tuesday night the Dow futures were down over 140-points, last I had checked, but later were in positive territory when the cash market opened up. It did the same on Monday night as the Dow futures were down over 130-points, but the cash market opened flat. The wild swings are happening day and night; mostly being triggered by the news out of Europe, which continues to be the where all eye are looking.
The S&P 500 did move above the short-term resistance we mentioned yesterday but seemed to find more resistance at the longer term descending trend-line. It did manage to close back above the 20-day EMA but the recent volatility has the index hopping above and below that line like a Mexican jumping bean.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 1200 level may be a tough test on the upside as that trend line falls, and the 50-day EMA is still up by 1218 and falling. These strong rallies certainly get your attention if you are on the sidelines, but I don't see too much to be positive about - simply based on the chart. In particular the bear flag, the death cross (50 below 200-day EMA), and the new descending trend. If we see a move above the 50-day EMA and the August high, things get more interesting on the bullish side.
The leader, Dow Transportation Index, showed some positive developments as it gained another 2% on top of Tuesday's 3.4% gain. Volume has picked up and the index is back above the 20-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transports are very volatile and will likely lead on the up, or downside, whichever way it eventually resolves itself, so keep an eye on it as well.
This market can fool a lot of people by breaking out to the upside from here. As one of our message board members asked yesterday (RMI); "Why does the market continue to go up even though most people are talking about a re-test of the August lows?" I thought about and realized, that is exactly why it is going up.
As contrarians, many of us know the market will do what the herd least expects. If too many of us believe we need to wait for a test of the lows before we can buy back in, then the market is more likely to move up without us. Then we could be forced to chase, which will add fuel to the rally.
I am speculating because I actually don't know how many people are looking for a retest of the lows, but our sentiment surveys have sure remained overly bearish for quite some time. If that is the sentiment outside of our TSP world, and there is some evidence of that, we may not get that test of the lows until after a big rally shakes things up in the sentiment department.
Tom Crowley
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.
Stocks continue to ride the volatility rollercoaster and it seems to be picking up steam. The Dow quickly sank over 100-points in early trading as the on-again, off-again support for a Greece bailout hit the headlines.
The on-again won the battle and it looks like Greece will stay in the Euro-zone, despite default remaining a good possibility. The Dow rallied nearly 400-points from bottom to top yesterday, before a late sell-off took away half of the day's high gains, but the Dow still closed up 141-points.
For the TSP, the C-fund was up 1.35% yesterday, the S-fund gained 1.74%, the I-fund added 1.15%, and the F-fund (bonds) ticked up 0.01%.
The volatility is even worse than you see during the day. On Tuesday night the Dow futures were down over 140-points, last I had checked, but later were in positive territory when the cash market opened up. It did the same on Monday night as the Dow futures were down over 130-points, but the cash market opened flat. The wild swings are happening day and night; mostly being triggered by the news out of Europe, which continues to be the where all eye are looking.
The S&P 500 did move above the short-term resistance we mentioned yesterday but seemed to find more resistance at the longer term descending trend-line. It did manage to close back above the 20-day EMA but the recent volatility has the index hopping above and below that line like a Mexican jumping bean.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 1200 level may be a tough test on the upside as that trend line falls, and the 50-day EMA is still up by 1218 and falling. These strong rallies certainly get your attention if you are on the sidelines, but I don't see too much to be positive about - simply based on the chart. In particular the bear flag, the death cross (50 below 200-day EMA), and the new descending trend. If we see a move above the 50-day EMA and the August high, things get more interesting on the bullish side.
The leader, Dow Transportation Index, showed some positive developments as it gained another 2% on top of Tuesday's 3.4% gain. Volume has picked up and the index is back above the 20-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transports are very volatile and will likely lead on the up, or downside, whichever way it eventually resolves itself, so keep an eye on it as well.
This market can fool a lot of people by breaking out to the upside from here. As one of our message board members asked yesterday (RMI); "Why does the market continue to go up even though most people are talking about a re-test of the August lows?" I thought about and realized, that is exactly why it is going up.
As contrarians, many of us know the market will do what the herd least expects. If too many of us believe we need to wait for a test of the lows before we can buy back in, then the market is more likely to move up without us. Then we could be forced to chase, which will add fuel to the rally.
I am speculating because I actually don't know how many people are looking for a retest of the lows, but our sentiment surveys have sure remained overly bearish for quite some time. If that is the sentiment outside of our TSP world, and there is some evidence of that, we may not get that test of the lows until after a big rally shakes things up in the sentiment department.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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.
