6/13/12
Stocks rallied sharply yesterday regaining much of Monday's losses. The jumpy action is making it tough to trust the market as it seems to be hanging on every headline out of Europe. The Dow gained 163-points.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD] +0.004%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD] - 0.21%
[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD] +1.17%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD] +1.23%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD] +1.53%
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 is coiling up for something. Whether that is a move up or down is hard to say. The indicators don't look too bad, but a test of the lows is always on the table after the sell-off.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 50-day EMA will be trouble on the upside while the 200-day EMA, the 200-day SMA (not shown), the May low, and now the June lows will be the places to look for support.
The Nasdaq also found resistance at the recent May peak near the 50-day EMA and there is still an open gap about 60-points below yesterday's close.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The yields on the 10 and 30 year bonds have come off of their lows, but both are now challenging their 20-day EMA's.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 20-day EMA is not normally strong resistance, but you can see that neither yields have been above the 20-day EMA since early April.
If the 20 EMA does hold, it tells us that bonds (F-fund) may be ready for another bounce since bond prices move counter to bond yields. Also, yields have been moving hand in hand with stock prices so if the 20-day EMA resistance holds in the bond yields, it could mean stocks would pull back as well. If the yields can move above the 20-day EMA for the first time in over two months, stocks may also break to the upside.
Probably nothing you didn't already know, but I don't want to make this any more difficult than it needs to be. If investors are buying bonds (bonds up, yields down) then it is probably because they are shying away from buying stocks.
Thanks for reading! We'll see you tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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