1/11/13
The rally continued as the dip buyers have been quick to act. The Dow gained 81-points, the S&P gained 0.8%, the Nasdaq and small caps lagged a bit, and the international stocks had a big day with the help of a weak dollar.
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 144"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]0.0043%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.14%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]0.76%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]0.23%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]1.56%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 seems to be breaking out of the bull flag and it is back to riding the resistance line of the ascending trading channel, ala 1987.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There are two levels to that trading channel and while we are seeing some overbought readings in the indicators that can bring out the pucker factor, as long as the S&P remains above that blue support line, I want to keep a bullish approach.
The chart of the dollar couldn't look any more bearish. Not only is it in a long-term bearish head and shoulders pattern (blue) but the right shoulder has a smaller head and shoulders pattern in it (red), and it has now pulled back from the test of the middle of the head.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It will be a big problem for the dollar if the smaller H&S pattern breaks through its neckline since that is the same area as the neckline of the larger H&S. The downside target would be 77 to 74, and I think a platinum trillion dollar coin would do even more damage - if that was even a serious consideration.
A big drop in the dollar would help the price of stocks and commodities, but the big winner will be, and has been lately, the I-fund. The movement in the I-fund is directly inversely affected by the action in the dollar.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The EAFE Index was up just 0.29% in the local international currencies yesterday, but because of the weakness in the dollar we saw much bigger gains in the I-fund, which is of course calculated in dollars.
So, if the dollar does breakdown from the H&S patterns, you really need to consider having some of your account allocated in the I-fund if you are in the stock funds.
Thanks for reading! Have a great weekend!
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.
The rally continued as the dip buyers have been quick to act. The Dow gained 81-points, the S&P gained 0.8%, the Nasdaq and small caps lagged a bit, and the international stocks had a big day with the help of a weak dollar.
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 144"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]0.0043%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]-0.14%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]0.76%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]0.23%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]1.56%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 seems to be breaking out of the bull flag and it is back to riding the resistance line of the ascending trading channel, ala 1987.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There are two levels to that trading channel and while we are seeing some overbought readings in the indicators that can bring out the pucker factor, as long as the S&P remains above that blue support line, I want to keep a bullish approach.
The chart of the dollar couldn't look any more bearish. Not only is it in a long-term bearish head and shoulders pattern (blue) but the right shoulder has a smaller head and shoulders pattern in it (red), and it has now pulled back from the test of the middle of the head.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It will be a big problem for the dollar if the smaller H&S pattern breaks through its neckline since that is the same area as the neckline of the larger H&S. The downside target would be 77 to 74, and I think a platinum trillion dollar coin would do even more damage - if that was even a serious consideration.
A big drop in the dollar would help the price of stocks and commodities, but the big winner will be, and has been lately, the I-fund. The movement in the I-fund is directly inversely affected by the action in the dollar.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The EAFE Index was up just 0.29% in the local international currencies yesterday, but because of the weakness in the dollar we saw much bigger gains in the I-fund, which is of course calculated in dollars.
So, if the dollar does breakdown from the H&S patterns, you really need to consider having some of your account allocated in the I-fund if you are in the stock funds.
Thanks for reading! Have a great weekend!
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.
