11/13/12
Stocks were mostly flat yesterday and on Friday, as light volume holiday trading took a little of the pressure off of stocks after the sharp post-election sell-off. The Dow gained 4-points on Friday and lost less than 1 yesterday.
The fund returns below are from Friday as the TSP was closed on Monday.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 156"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0036%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] -0.03%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] 0.17%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] 0.13%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.27%[/TD]
[/TR]
[/TABLE]
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Today's (Tuesday's) closing fund returns will reflect Monday and Tuesday's market action.
On first glance, the S&P 500 looks like it would be in a very nice area to buy if you were waiting for a pullback or correction. The 200-day EMA has held for a 3rd straight days and the index is still above a longer-term rising trendline. If the story ended there we could all jump into stocks with both feet.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
But the leaders and the Dow are not telling the same story. They are all already below the 200-day EMA leading us to believe that the S&P will likely follow.
Here's the Dow...
The Nasdaq...
The Russell 2000...
And the Dow Transportation Index...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The indices are on the oversold side, and a bounce back up to test the 200-day EMA on these would seem probable. Even a relief rally up to fill the open gaps listed above is also possible on the more volatile indices.
Looking for another reason for a rebound, the TSP Talk Sentiment Survey came in at 37% bulls, 53% bears, for a bulls to bears ratio of 0.70 to 1. That is a buy signal which means the system moved to a 100% S fund allocation for this week.
The Rydex Cash Flow Ratio shows investors getting quite defensive as well, which is usually a bullish sign - at least for the short-term. The market has tended to rebound, or at least stop the severe bleeding, once this indicator hit the 0.95 area over the last couple of years, and here it is at 0.95.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Whenever the major indices trade below the 50-day and 200-day EMAs, we should really start to think about defense. There will be relief rallies, but it's just a lot more dangerous to buy the dips while the market is in a downtrend and below the major EMA's. I like the idea of playing for that rally, particularly if there is any kind of panic selling this week, but until we see some technical improvement in the charts, my bullish thoughts are only short-term.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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.
