Looks bad, but there's a bit of hope

11/22/11

Stocks were rocked yesterday on news out of Europe and the realization that our "Super Committee" will not be so super. The Dow lost 249-points, which was 90-points off of the lows, but not quite enough to say it was a reversal day.

For the TSP, the C-fund fell 1.86% yesterday, the S-fund lost 1.93%, the I-fund dropped 2.80%, and the F-fund (bonds) gained 0.08%.

The S&P 500 is on the brink of a breakdown, and only holding on by a thread to any possible bullish scenario. We can get a relief rally, and one is due, but I am talking about the new bull market we had hoped was starting.

Looking at some of the indicators that I watch, we can see that some are at extreme levels that have triggered decent rebounds, but that is only taking the short-term into consideration.

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

The possible bullish scenario is the bull flag (in blue above), but at this point it is a bit of a stretch as it looks more and more like this is a breakdown and a major lower low. Should the S&P rebound back to the top of the flag, and eventually break to the upside, I would be surprised, but it would be a legitimate bullish possibility

The NYSE is now oversold, but it does has room to move down before it gets in extreme territory.

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

The Nasdaq 100, the large cap tech index, opened a wide gap during yesterday's decline. In the short-term, filling the gap is a serious bullish possibility, and it helps that it may have produced a reversal day. But you can see that the 200-day EMA has been broken and there is not very much support to count on should any rebound fail.

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

The leader, Dow Transportation Index, also has a big bull flag on the chart, but the fact that it is trading below the 20, 50, and 200-day EMA's is obviously a concern. It needs to make a move to the upside rather quickly or it could be lost too.

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

Other than being oversold, about the only other thing the market has going for it is the strong seasonality during the rest of the week. Holidays are pretty strong seasonal indicators but seasonality in general is not a primary indicator. Depending how the indices react to overhead resistance if we do get a holiday assisted bounce, should determine how defensive I will get in December.

Thanks for reading! We'll see you back here tomorrow.

Tom Crowley


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[xarmy87]

Well, that's it, i am out...for good. In case no one else has noticed , the major economys/countrys of the world (USA included) are mired in never before seen levels of indebtness. i beleive the Mayan's calender may be correct about '2012 ? So i am taking the TSP to an ira, cashing out and buying a nice home and land in West Va. (for cash) and then hoping the O.P.M. never cancel's my retirement annuity ,-). But that could be a very real possibility in the (coming?) year's. If so, it's back to gardening, fishing, hunting and oh yeah, makin' home brew . So Mr. Crowley, thanks for helping me some in the last 2 year's, and good luck to you TSP'ers in your pursuit. Peace out, and Gobble Gobble! Brian.

 

[tsptalk]

Now THAT's capitulation.

Best of luck and thanks for your contributions!

 

[silversurfer]

The charts are very interesting, as well as all the input from EMA's, flags, breakouts, etc. However, that being said, how does any of that stuff factor in the supercommittee and the money issues in France and Greece? It would seem on a normal week with nothing happening you could quite easily make sense of a chart, but current events is going to throw a large wrench into the works. I picked the 10th of november to get out because i knew the news would turn to the supercommittee and drops would happen. Pessimistic move or not, it seems it was a good move.

 

[tsptalk]

Everything that has already happened is in the charts. While it's easy for me to Monday morning quarterback, the fact that the S&P broke down on Thursday and Friday of last week should have told me that the supercommittee news would not be good.

Sure, news can shake things up, but normally we can't predict the news. We just use the charts to give us some clues.

In your case, you were smart enough to get out, but the charts did try to tell us. I just have to listen closer. Unfortunately, with just 2 IFT's a month, we can't always sidestep every drop and jump in for every rally.

 

[kassypoo]

This has been the most frustrating, trying year I can remember. If I ever make back what I've lost in the last few years, I'm gonna capitulate (lol) into the G fund and stay there. This game is gettin' too tough for me...

 

[Mapper]

My casual observation is that sentiment is turning bearish, or so I hope! Looking forward to this weeks SS

 

[Viva_La_Migra]

I made the classic mistake of buying high. Fortunately I have another IFT and half my account to buy more at a lower price. The question is, when? Maybe I'll put the rest in tomorrow and hope for a nice Santa Claus rally.

 

[kassypoo]

I've waited the 3 days to see if this really a downturn. Should I go ahead and bail now, or wait a little longer? I keep hoping for an oversold rally, so I can get out. Everyone on CNBC seems to think it's the end of the world. Any advice or handholding (lol) would be helpful....

 

[tsptalk]

The indicators suggest a bounce is due, but it's a holiday week so you never know what will happen. Seasonality is strong thru Friday but light volume could suggest unpredictable moves.