08/22/13
Stocks ended a wild day down about a half of a percent yesterday, triggered by the release of the Fed Meeting Minutes. At the time of the release, the Dow was down about 50-points. From there it went to down 120, to up 17, to down 105; all in the last 2 hours of trading.
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[TD="align: center"] Daily TSP Funds Return[TABLE="width: 162"]
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[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0056%[/TD]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] -0.19%[/TD]
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[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -0.57%[/TD]
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[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -0.58%[/TD]
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[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.83%[/TD]
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[TD="align: right"] [/TD]
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The trend continues: As bond yields rise, stocks fall. The 10-year Treasury yield moved up about 0.04, going from 2.81% to 2.85%. As 3% nears, investors are selling stocks.
The dollar was up about 0.5% yesterday which helped make the I-fund the laggard yesterday.
The S&P 500 (SPY) continues to remain below the 50-day EMA (4th close below) while holding above the new short-term descending trading channel. It could be a bear flag here, but it's not very clean. The other indices, as you will see, are clean.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer-term chart shows the recent selloff has taken the S&P 500 below one of the major support lines (black, which had been temporarily broken in June/July) and is now closing in on the bottom of the longer-term rising trading channel (red). That support line, along with the 200-day EMA, are now what stands between the current bull market and a potential bear market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The leaders are flagging out on us. I see a bear flag on the Nasdaq...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Continues...
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[TD="align: left"] We interrupt today's commentary with an important announcement:
After nearly 10 years of writing a daily market commentary here at TSP Talk, I am going to begin my own Premium Service that I will call "TSP Talk Plus". I will continue to provide a free basic daily market commentary right here, but TSP Talk Plus will provide a little extra.
With Scribbler and more recently Ebbchart, moving onto other endeavors in the last year, and the sudden health issues that caused Trader Fred to hastily retire this past spring, I thought it would be a good time to introduce this service which I have been considering for some time.
I am very close to having the service I want but I'm still working on some minor details. I will explain it all very soon, but here are a couple of quick "wills and won'ts".
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More info to follow:[/TD]
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The following type of analysis may not be in the free basic daily market commentary, but will be in TSP Talk Plus starting next week. You might want to check it out and make sure you can login now so you don't have any problems trying to get access next week (http:TSP Talk Members' Home Page). See instructions above.
There is a bear flag on the Dow Transportation Index, plus it closed below the 50-day EMA for a 5th straight day. That's a confirmation and a wake-up call.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There's a bear flag on the Russell 2000 small cap index...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The ARMS Index, an indicator I had given up on for a long time, is back giving some decent signals. The 10-day moving average has rolled over, but is not yet near levels where we have seen some bottoms form during recent pullbacks. Readings of 1.20 have usually been pretty good short-term buy signals but during the financial crises we saw some obscene readings and the indicator took years to get back normal. Readings between 0.80 and 1.20 are more "normal" overbought / oversold levels.
Here's the 10-year treasury yield. Not quite to new highs but it reversed Tuesday's decline.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar was up 0.5% yesterday giving the I-fund some fits, after rebounding off the June low. The question here is, will the dollar (UUP) find support here at the lower end of it's recent trading channel, or are new lows coming?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The folks in the I-fund would prefer to see new lows since the dollar directly affects the share price of the I-fund inversely.
Stocks are oversold and due for some relief, but they can become more oversold. The bear flags would indicate there could be more downside coming. I'm not brave enough to buy here, but fear is usually a good buy signal as we know from the Sentiment Survey System.
Thanks for reading! We'll see you back here tomorrow.
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.
