09/26/11
Stocks waffled around most of the day on Friday as the major indices flip flopped above and below the break-even mark all day long. By the close, the Dow had gained 38-points. Considering what happened on Thursday, Friday's action was pretty uneventful.
For the TSP, the C-fund gained 0.62% on Friday, the S-fund was up 1.14%, the I-fund picked up 1.12%, and the F-fund (bonds) fell 0.50%.
For more on the weekly and monthly returns, please see our TSP Weekly Wrap-Up.
The modest gains on Friday did little technically to help the current situation, but it may have set up a possible historically bullish situation. I'll get to that below. The breakdown on Thursday is still the big news, and while the bear flag breakdown turned old support into possible new resistance, the August lows are still holding.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq's 20-day EMA and the top of the open gap look like perfect relief rally targets, but the bottom of the rising wedge / bear flag could act as resistance on any rally. The resistance line is rising so I guess we could see the gap get filled within 3 or 4 days without moving above that resistance.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There has been talk from the trading community about something Art Cashin mentioned on Friday. It's called the Thursday / Monday Syndrome. Art said:
"The classic Thursday/Monday syndrome starts with the kind of action we saw yesterday. The markets open under pressure and selling accelerates in swelling volume. By early afternoon, there is a virtual stampede of selling. Then, later in the session, stocks stabilize a bit based on some reassurance…
"The action on Friday (and Saturday in the case of 1929) is uneven, often ending choppily steady or somewhat weaker.
"Then on Monday, the trapdoor opens with liquidation and margin calls bringing tsunamis of selling."
- Source: http://blogs.wsj.com/marketbeat/2011/09/23/cashin-eye-of-the-storm/
I am always leery of a theory that a lot of people are talking about, but there is some history behind it, and the outcome turns out to be bullish.
Chart provided courtesy of www.sentimentrader.com
So, a nice washout today may actually set up a buying opportunity.
The latest TSP Talk Sentiment Survey came in at 29% bulls, 63% bears, for a bulls to bears ratio of 0.46 to 1. That is a buy signal so the system will remain 100% in the C-fund for this week.
The prior week's 0.98 to 1 ratio was so close to the 1.0 to 1 ratio it needed to get back into the G-fund to miss last week's big sell-off, but the system doesn't round up or down and so technically it stayed in the C-fund and took the losses. But no matter how you slice it, the current 0.46 to 1 ratio is a fresh confirmation of a buy signal for this coming week.
It's looking more to me like we have a buying opportunity coming up some time this week, but the market rarely makes it easy for us. If things get ugly today or tomorrow, it could get very tough to want to be a buyer, and not buying may be the safest thing to do. But for anyone looking to gamble (and that's what it is) and looking to catch a rally, sometimes the time to buy is when things look their worst.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Stocks waffled around most of the day on Friday as the major indices flip flopped above and below the break-even mark all day long. By the close, the Dow had gained 38-points. Considering what happened on Thursday, Friday's action was pretty uneventful.
For the TSP, the C-fund gained 0.62% on Friday, the S-fund was up 1.14%, the I-fund picked up 1.12%, and the F-fund (bonds) fell 0.50%.
For more on the weekly and monthly returns, please see our TSP Weekly Wrap-Up.
The modest gains on Friday did little technically to help the current situation, but it may have set up a possible historically bullish situation. I'll get to that below. The breakdown on Thursday is still the big news, and while the bear flag breakdown turned old support into possible new resistance, the August lows are still holding.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq's 20-day EMA and the top of the open gap look like perfect relief rally targets, but the bottom of the rising wedge / bear flag could act as resistance on any rally. The resistance line is rising so I guess we could see the gap get filled within 3 or 4 days without moving above that resistance.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There has been talk from the trading community about something Art Cashin mentioned on Friday. It's called the Thursday / Monday Syndrome. Art said:
"The classic Thursday/Monday syndrome starts with the kind of action we saw yesterday. The markets open under pressure and selling accelerates in swelling volume. By early afternoon, there is a virtual stampede of selling. Then, later in the session, stocks stabilize a bit based on some reassurance…
"The action on Friday (and Saturday in the case of 1929) is uneven, often ending choppily steady or somewhat weaker.
"Then on Monday, the trapdoor opens with liquidation and margin calls bringing tsunamis of selling."
- Source: http://blogs.wsj.com/marketbeat/2011/09/23/cashin-eye-of-the-storm/
I am always leery of a theory that a lot of people are talking about, but there is some history behind it, and the outcome turns out to be bullish.
Chart provided courtesy of www.sentimentrader.com
So, a nice washout today may actually set up a buying opportunity.
The latest TSP Talk Sentiment Survey came in at 29% bulls, 63% bears, for a bulls to bears ratio of 0.46 to 1. That is a buy signal so the system will remain 100% in the C-fund for this week.
The prior week's 0.98 to 1 ratio was so close to the 1.0 to 1 ratio it needed to get back into the G-fund to miss last week's big sell-off, but the system doesn't round up or down and so technically it stayed in the C-fund and took the losses. But no matter how you slice it, the current 0.46 to 1 ratio is a fresh confirmation of a buy signal for this coming week.
It's looking more to me like we have a buying opportunity coming up some time this week, but the market rarely makes it easy for us. If things get ugly today or tomorrow, it could get very tough to want to be a buyer, and not buying may be the safest thing to do. But for anyone looking to gamble (and that's what it is) and looking to catch a rally, sometimes the time to buy is when things look their worst.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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