10/04/12
It was more back and forth for stocks yesterday as an early decline turned into gains, but by the close the indices were close to flat. The Dow gained 12-points.
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Daily TSP Funds Return[TABLE="width: 149"]
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[TD="align: right"] G-Fund:
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[TD="align: right"] 0.0036%
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[TD="align: right"] F-fund:
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[TD="align: right"] 0.00%
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[TD="align: right"] C-fund:
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[TD="align: right"] 0.38%
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[TR]
[TD="align: right"] S-fund:
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[TD="align: right"] 0.07%
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[TR]
[TD="align: right"] I-fund:
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[TD="align: right"] -0.48%
[/TD]
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The S&P 500 is coming toward the end of a small apex and just to keep us guessing, these triangles can give us false breakouts before moving in the direction of its ultimate path - although this is a small triangle and the false breakouts tend to come near the 65% to 70% area of the triangle and it is already closer to 90%. Strong support remains in the 1430 area.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index had a nice day - bouncing 1.2% and moving back into the trading range. The question here has been whether what looked like a bear flag was going to break down, or if the Transports would head back toward the top of the trading channel.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This move back into the trading range is a plus, but not a slam dunk as it is still trading below the major Exponential Moving Averages, and the 50-day EMA is below the 200-day EMA which, as far as my definition goes, is an official bear market so there is a lot of work to be done here.
Bonds, per the ETF TLT, are in an interesting situation. The TLT is running into resistance at the top of a well defined descending trending channel, but it has also created a clear bull flag which tend to break to the upside.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It is not always the case, but we know bonds tend to do better when stocks struggle and vice versa, and if that is the case, the stock market bulls would like to see this chart pull back from the resistance.
As we have been watching for a while now, the dollar has created a large bear flag but there is room above before any serious resistance is met. The 200-day EMA and two resistance lines meet near 80.50, and that gives the dollar about 0.50 wiggle room.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
But make no mistake about, this chart is looking bearish overall and while is not a great sign for the economy - inflation-wise - it will help the price of stocks to some degree. A falling dollar does not guarantee rising stock prices, but it is a bit of a cushion for stocks, particularly for international stocks and the I-fund.
On Friday morning we will get the September jobs report and current estimates are looking for a gain of 120,000 jobs, and an unemployment rate of 8.1%.
Finally, the TSP offices, as well as the bond market, will be closed on Monday for Columbus Day, despite the stock market remaining open. That means Tuesday's share prices will reflect the market index changes from Monday and Tuesday. Something to consider after Friday's jobs report.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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