Late surge to resistance

2/15/12

Stocks were down sharply for most of the day yesterday as the Dow was off 87-points in afternoon trading, but a late surge, coinciding with a report from Reuters that Greece’s conservative party will commit to austerity measures, drove the Dow into positive territory (+4) at the close.

For the TSP, the C-fund was down 0.08% yesterday, the S-fund lost 0.28%, the I-fund fell 0.82%, and the F-fund (bonds) gained 0.24%.

It looked like the streak was going to be broken, but the late rally took the S&P 500 right up to the highs it has been touching for the 5 prior days. Those highs have been 1351, 1354, 1351, 1353, 1352 and yesterday 1351.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

And speaking of streaks; Tuesday marked the 30th trading day in 2012, and the S&P 500 still has not suffered a 1% down day all year. It is not common but it has happened 12 other times going back to 1928.

Chart provided courtesy of www.sentimentrader.com

In 1993 the streak ended after day 30. In 1936 and 1967 it went on to day 38. After hitting day 30, the average streak went on to 47 days. In 11 of those 12 previous instances, the S&P 500 closed in positive territory for the year with an average return of 15.5%.

The recent sideways action has taken the overbought / oversold indicator from an almost extremely overbought reading, back into a more neutral reading. Going from that overbought to neutral while the S&P 500 is 3-points from a 9+ month high is not bad action at all.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Monday is a holiday and you can see that historically, the day prior to (Friday) and the day after (Tuesday) the holiday have a poor track record. There's not a lot of good on this chart except for day -3, which is today.

Chart provided courtesy of www.sentimentrader.com

And today (Wednesday) may get off to a good start as the late surge on Tuesday seems to have rolled over into the overnight trading because the U.S. index futures, and the Asian markets are up sharply as I write this on Tuesday night.

Thanks for reading! We'll see you tomorrow.

Tom Crowley


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[DigDugII]

Thank you Mr. Crowley. I always look forward for your commentary. Question: I stumbled upon the answer a few weeks ago on TSPTalk somewhere but I can't seem to relocate it. Why do the share prices differ on the TSP from the share price shown at the market close? Sometimes it's only by a little and sometimes it's significant. Thanks again for your valuable insight!

 

[tsptalk]

Hi DD -

I think this is what you are looking for...

http://www.tsptalk.com/mb/i-fund/3111-what-fv-how-does-work.html

Thanks for reading!

 

[Bronco07]

Thanks Tom,
The S&P 500 Performance data after 30 days without 1% loss is very strong data --- tough to argue with..... cheers

 

[pmcint01]

I still don't understand the surge in the last 30 minutes yesterday. Reading articles about Greece this morning still says there is much uncertainty that they will not meet all of the austerity measures and still could default and be dropped form the Euro Zone. They canceled the meeting they were supposed to have today and now have a conference call scheduled. Doesn't seem like good news to me.

 

[tsptalk]

It could have been a short covering rally. The news may not have been big, but traders may not have wanted to be short into the close if there was something positive in the works in Europe overnight.