8/03/12
Stocks fell for a fourth straight day yesterday, but an afternoon rally took the indices off their worst levels of the day, and many indices put in positive reversal day. The Dow dropped 92-points.
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[TD="align: right"] S-fund:
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[TD] - 0.46%
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[TD] - 0.79%
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We saw more uncertainty out of Europe yesterday (surprise, surprise) and the market has now given back much of the gains from the Euro driven rally last week.
The S&P 500 broke below the 20-day EMA temporarily yesterday, but the late bounce took it back above it. The kangaroo-tail looks almost good enough to call a reversal day and it looks even better in other indices.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index nearly climbed back into positive territory just before the close.
That created a strong kangaroo-tail reversal, and it turned around right at a rising support line.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This market leader had led on the downside so this reversal is a good sign for the S&P 500. Although the Transports are clearly in a downtrend and any rally will have to deal with what is going to be strengthening resistance.
I was looking at the chart of the S&P 500 trying to figure out if the market reversals we have seen at the beginning of every month since March, have been related to the jobs reports which come out on the first Friday of each month. It turns out, that is not the case, but rather these reversals seem to be more related to the new month as every one came on the first trading day of the month, or a day or two later.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So the question is, was the late July peak that turned into a pullback, the reversal for August, or will the reversal turn out to be yesterday (trading day #2 in August), which would be more in line with 5 consecutive new month reversals?
Today is jobs report Friday. Estimates are looking for a gain of 105,000 jobs, and an unemployment rate of 8.2%. Fasten your seatbelts.
Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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