5/18/12
Stocks dropped sharply yesterday with many of the major indices breaking through the important 200-day EMA. The Dow lost 156-points while, percentage-wise, the losses were even steeper in the broader indices.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD] - 1.49%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD] - 2.58%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD] - 1.46%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD] +0.14%
[/TD]
[/TR]
[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD] +0.004%
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 has now fallen through the 200-day EMA and a little panic may be setting in. Perhaps a capitulation is at hand? If not, it could be something more sinister.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I have mentioned this conspiracy theory before, that is, that I believe that sometimes the market acts a little strangely before big news comes out. I don't mean that there is inside information, but more along the lines that the millions of people that make up the world stock markets, together become, as a whole, more intelligent than the individuals that make it up.
For instance: Why did the stock market drop 9.1% in the two weeks leading up to September 11, 2001? This chart goes through September 10, 2001...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I am not saying that we are going to see another terrorist attack, but if this market does not turnaround and do its usual snap-back rally after hitting extremely oversold conditions, the market may be telling us that something sinister may be coming down the pike. Here is the chart after Sep. 11, 2001...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It could be financial, geo-political, a natural disaster, etc., - who knows? But a market this overbought needs to rebound, or I may start getting a little paranoid.
Here's how extreme the indicators are getting:
When this Confidence Indicator from sentimenTrader.com hits 60% on one side, and less than 40% on the other, we have a signal - in this case a buy signal...
Chart provided courtesy of www.sentimentrader.com
This compilation indicator shows how many individual indicators are in an extreme bullish reading vs. those in an extreme bearish reading...
Chart provided courtesy of www.sentimentrader.com
And this chart shows how the market reacts after both the short and intermediate-term market scores, as defined by sentimeTrader.com, hit extreme levels...
Chart provided courtesy of www.sentimentrader.com
They said:
"On Thursday, the Short-term Score reached 81% and the Intermediate-term Score hit 156%, for a total combined Score of 237%. Since 2000, there have only been four days that recorded a combined Score of greater than 235%: 9/21/01, 10/9/08, 5/20/10 and 8/8/11.
"Over the next week, at least, the S&P rebounded strongly and with the exception of 2008 was forming the grounds of an intermediate-term low."
Again, this market is either going to rebound sharply in the next week or so, or expect some very bad news to hit the headlines. On that positive note...
Thanks for reading! Have a great weekend!
Tom Crowley
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. Bet the peacenik Libbies didn't think that one through:laugh:.
