09/21/11
Stocks rallied early but fell late as the 50-day EMA continues to act as resistance. The Dow closed up 8-points, giving up most of the day's 150-point gain in the last two hours of trading.
For the TSP, the C-fund was down 0.16% yesterday, the S-fund lost 1.45%, the I-fund added 0.53%, and the F-fund (bonds) slipped 0.07%.
The story remains the same for the S&P 500 as the 50-day EMA is holding as resistance and the bear flag continues to be the big eye sore on this chart.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The surprise move here would be a breakout above the 50-day EMA, and while I am still favoring the downside, this market has surprised me many times before. But this latest rally could just be a test of the of that small head and shoulders pattern we noted last week.
Remember this?
Now if this test, and the 50-day EMA get taken out, I'll have to seriously consider that we have seen the bottom.
The small caps of the Russell 2000 have lagged the last couple of days and we're seeing more of a pennant formation here. Pennants tend to break in the direction of the larger trend, which in this case is down.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq has been outperforming as it is one of the only major indices to get back above its 50-day EMA, but it has now been facing the 200-day EMA. We see a rising wedge, which is a bearish formation, and it is at the top of the wedge, and of course it can also be considered a bear flag.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index, which is very sensitive to the economic environment, has remained in a trading range and is now hitting some overhead resistance. It remains below the 50-day EMA and I don't see anything yet to tell us anything bullish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Long consolidations can result in a bottom, but as we talked about before, they can go on for months and they do tend to test the lows a couple of times.
The chart of the dollar actually looks very bullish as we can see it moved above the 200-day EMA and, in the process, created a big bull flag that has already pulled back and successfully tested the 200 EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
A strong dollar will have a negative impact on commodity prices like copper, oil, corn, etc., which will at some point become a positive as consumers would have more cash in their pockets, but in the short-term the strength in the dollar could also put pressure on the price of stocks.
The Fed's FOMC meeting concludes today and we should hear the policy statement around 2:15 pm ET. That could be a market mover but the big catalyst is still coming out of Europe and their debt contagion.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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.
Stocks rallied early but fell late as the 50-day EMA continues to act as resistance. The Dow closed up 8-points, giving up most of the day's 150-point gain in the last two hours of trading.
For the TSP, the C-fund was down 0.16% yesterday, the S-fund lost 1.45%, the I-fund added 0.53%, and the F-fund (bonds) slipped 0.07%.
The story remains the same for the S&P 500 as the 50-day EMA is holding as resistance and the bear flag continues to be the big eye sore on this chart.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The surprise move here would be a breakout above the 50-day EMA, and while I am still favoring the downside, this market has surprised me many times before. But this latest rally could just be a test of the of that small head and shoulders pattern we noted last week.
Remember this?
Now if this test, and the 50-day EMA get taken out, I'll have to seriously consider that we have seen the bottom.
The small caps of the Russell 2000 have lagged the last couple of days and we're seeing more of a pennant formation here. Pennants tend to break in the direction of the larger trend, which in this case is down.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq has been outperforming as it is one of the only major indices to get back above its 50-day EMA, but it has now been facing the 200-day EMA. We see a rising wedge, which is a bearish formation, and it is at the top of the wedge, and of course it can also be considered a bear flag.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index, which is very sensitive to the economic environment, has remained in a trading range and is now hitting some overhead resistance. It remains below the 50-day EMA and I don't see anything yet to tell us anything bullish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Long consolidations can result in a bottom, but as we talked about before, they can go on for months and they do tend to test the lows a couple of times.
The chart of the dollar actually looks very bullish as we can see it moved above the 200-day EMA and, in the process, created a big bull flag that has already pulled back and successfully tested the 200 EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
A strong dollar will have a negative impact on commodity prices like copper, oil, corn, etc., which will at some point become a positive as consumers would have more cash in their pockets, but in the short-term the strength in the dollar could also put pressure on the price of stocks.
The Fed's FOMC meeting concludes today and we should hear the policy statement around 2:15 pm ET. That could be a market mover but the big catalyst is still coming out of Europe and their debt contagion.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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.
