7/23/12
Stocks sold off on Friday as Spanish bond yields spiked above 7% - a level that has meant trouble for other European countries. The Dow lost 121-points on the day.
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[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return
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[TR]
[TD="align: right"] G-Fund:[/TD]
[TD] +0.004%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD] +0.19%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD] - 1.00%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD] - 1.16%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD] - 1.80%[/TD]
[/TR]
[TR]
[TD="colspan: 2, align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
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The S&P 500 is still in an uptrend and that's a big positive. The moving averages (20, 50, and 200 day) are lined up nicely with the faster ones below the slower, but I've noted the large divergence in the MACD indicator, which suggests that the trend may be running out of steam.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq, one of the market leaders, also remains in an uptrend, but you can see that last week's high was lower than the prior high, and while it might be too early to say, a lower high would create a possible bearish head and shoulders pattern. The neckline is lining up with the 200-day EMA so that would be a very key support level if tested.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index - the market leader - is testing the rising support but you can see that the series of lower highs has the index in a triangle formation.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
A break below the rising support and the 200-day EMA would be a big red flag here, but keep in mind that some of the triangle formations give a "fake-out" breakout before reversing and breaking through on the other side of the triangle.
We've been watching the dollar (via the ETF, UUP) trying to determine whether it will fill the large open gap or if the rising support will hold and we see a breakout to the upside.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Friday's spike in yields in Spain sent the dollar higher and so far support is holding and we may see another test of the recent highs this week. A breakout to the upside will likely prove to be troublesome for the stock market.
I see that our 10-year Treasury Note hit another all-time low overnight.
Today is the 15 trading day in July and we are close to getting past the very weak mid-July seasonal period. The end of July is much better historically, but August and September are two of the worst months of the year so we can't get too excited.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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