06/04/13
Stocks struggled coming out of the gate on Monday morning after Friday's big late 206-point sell-off. But as we headed into afternoon trading, the buyers were less shy about buying the dip and the Dow ended the day up 138-points. Some of the broader indices weren't as fortunate.
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[/TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 153"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]+0.0113%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]+0.04%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]+0.60%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]+0.08%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]+0.28%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
As we talked about for a few days, the first trading day in June produced 5 consecutive years of triple digit moves in the Dow (1 up, 4 down) and yesterday's 138-point gain made it 6 years in a row.
What happens next? Well, if you like trends we know that there have now been 20 consecutive positive Tuesdays in 2013. Of course that trend can't last forever, but how do you like the odds of a positive day today?
The S&P 500 closed well of its lows on Monday but is still below the pennent formation breakdown. As we've talked about before, many times the first break from a pennant is a false move and the eventual breakout occurs in the opposite direction.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Whether that happens this time, I don't know. If you give the benefit of the doubt to the major trend then the upside might seem to be the more logical case. If you are looking at a market that may be nearing a top, then this increase in volatility may be what we'd expect near a peak. There are some good arguments on both sides of the bullish / bearish fence so it's not an easy call.
The Dow Transportation Index ETF chart has a lot going on. It actually closed down on the day but there's falling wedge that tends to be bullish. There was a positive reversal day - also bullish, and the rising support lines and 50-day EMA have both held on yesterday's test, and that's looking bullish. But one move below those levels and that changes.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There was a nice positive reversal on the Russell 2000 yesterday causing what looks like a possible fake-out breakdown. That looks bullish too.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
You may have noticed that the Russell 2000 was up 1% yesterday yet the S-fund was only up fractionally at +0.08%. That's because the S-fund is the small caps of the Russell, plus the mid- cap stocks. It is basically all U.S. stocks that are not in the S&P 500. And look what happened to the mid-caps yesterday...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
They did put in a positive reversal day, but they ended the day down 0.3%. That is what kept the S-fund down.
I just wanted to quickly point out how quickly the AAII Investors retreated from their one-week bullish position. They went from a bull / bear of over 2 to 1, down to 1.22 to 1. The 2 to 1 ratio was a caution sign. 1.22 to 1 would be a buy signal on our TSP Talk survey.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
One last thing. Another Hindenburg Omen was triggered last week and these signals have come prior to some major market crashes. Of course not every time, but the record isn't too bad. The problem is, everyone is talking about it so I put that in the less effective category - but I won't dismiss it.
If you haven't heard of the Hindenburg Omen and / or you want to read more about it, check out this article. Hindenburg Omen.
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.
Stocks struggled coming out of the gate on Monday morning after Friday's big late 206-point sell-off. But as we headed into afternoon trading, the buyers were less shy about buying the dip and the Dow ended the day up 138-points. Some of the broader indices weren't as fortunate.
[TABLE="width: 88%, align: center"]
[TR]
[TD]
[TD="align: center"]Daily TSP Funds Return[TABLE="width: 153"]
[TR]
[TD]G-Fund:[/TD]
[TD="align: right"]+0.0113%[/TD]
[/TR]
[TR]
[TD]F-fund:[/TD]
[TD="align: right"]+0.04%[/TD]
[/TR]
[TR]
[TD]C-fund:[/TD]
[TD="align: right"]+0.60%[/TD]
[/TR]
[TR]
[TD]S-fund:[/TD]
[TD="align: right"]+0.08%[/TD]
[/TR]
[TR]
[TD]I-fund:[/TD]
[TD="align: right"]+0.28%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"]More returns [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
As we talked about for a few days, the first trading day in June produced 5 consecutive years of triple digit moves in the Dow (1 up, 4 down) and yesterday's 138-point gain made it 6 years in a row.
What happens next? Well, if you like trends we know that there have now been 20 consecutive positive Tuesdays in 2013. Of course that trend can't last forever, but how do you like the odds of a positive day today?
The S&P 500 closed well of its lows on Monday but is still below the pennent formation breakdown. As we've talked about before, many times the first break from a pennant is a false move and the eventual breakout occurs in the opposite direction.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Whether that happens this time, I don't know. If you give the benefit of the doubt to the major trend then the upside might seem to be the more logical case. If you are looking at a market that may be nearing a top, then this increase in volatility may be what we'd expect near a peak. There are some good arguments on both sides of the bullish / bearish fence so it's not an easy call.
The Dow Transportation Index ETF chart has a lot going on. It actually closed down on the day but there's falling wedge that tends to be bullish. There was a positive reversal day - also bullish, and the rising support lines and 50-day EMA have both held on yesterday's test, and that's looking bullish. But one move below those levels and that changes.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There was a nice positive reversal on the Russell 2000 yesterday causing what looks like a possible fake-out breakdown. That looks bullish too.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
You may have noticed that the Russell 2000 was up 1% yesterday yet the S-fund was only up fractionally at +0.08%. That's because the S-fund is the small caps of the Russell, plus the mid- cap stocks. It is basically all U.S. stocks that are not in the S&P 500. And look what happened to the mid-caps yesterday...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
They did put in a positive reversal day, but they ended the day down 0.3%. That is what kept the S-fund down.
I just wanted to quickly point out how quickly the AAII Investors retreated from their one-week bullish position. They went from a bull / bear of over 2 to 1, down to 1.22 to 1. The 2 to 1 ratio was a caution sign. 1.22 to 1 would be a buy signal on our TSP Talk survey.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
One last thing. Another Hindenburg Omen was triggered last week and these signals have come prior to some major market crashes. Of course not every time, but the record isn't too bad. The problem is, everyone is talking about it so I put that in the less effective category - but I won't dismiss it.
If you haven't heard of the Hindenburg Omen and / or you want to read more about it, check out this article. Hindenburg Omen.
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.
