7/24/12
Make it eight negative Mondays in a row for stocks. The indices opened sharply lower yesterday and while the Dow did make a decent comeback from its early 240-point decline, it still ended the day down 101-points.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD] +0.012%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD] +0.04%
[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD] - 0.89%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD] - 1.37%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD] - 2.50%
[/TD]
[/TR]
[TR]
[TD="colspan: 2, align: right"]
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 had fallen below the 20 and 50-day EMA's in early trading yesterday while testing the lower end of it rising trading channel, but support held and it managed to close back above the 50-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 1.2% loss in the Nasdaq opened up another big gap on the chart as the index closed below the 20 and 50-day EMAs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The lows on the Nasdaq completed a head and shoulders pattern. If it plays out like a typical H&S pattern, the question will be whether the neckline breaks or if we see a test of the head first.
The VIX (Volatility Index) moved up sharply as we saw a little bit of panic in the early trading. It moved above 20.5 before pulling back and closing at 18.6. That is still a 20% move above the low made last Thursday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
According to sentimenTrader.com, if the VIX moves up 20% in two days after hitting a multi-month low, the short-term can be a little sketchy at best.
Chart provided courtesy of www.sentimentrader.com
The yield on the 10 year Treasury Note broke below the prior all-time low yesterday, and despite closing well off the lows of the day, closed at a new all-time low at 1.435%.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 3-day rule is in effect - meaning I'll give this 3 days to prove it is a real breakdown. If it is, this wouldn't be a very good sign for the stock market as yields tend to go down when stocks go down. And since yields move opposite of bond prices, it would be bullish for the F-fund. But let's give it a few days to try to climb back above that support line.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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