6/27/12
Stocks rebounded modestly on light volume yesterday as the Dow added 32-points.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD] +0.004%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD] - 0.09%
[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD] +0.48%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD] +0.60%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD] -0.24%
[/TD]
[/TR]
[TR]
[TD="colspan: 2, align: right"]
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 was able to close above the 200-day EMA again, after falling below it intraday. Whether we have seen the bottom of this recent pullback remains to be seen, but if we do get a test of the middle of the head of the inverted head and shoulders pattern, we could visit the area within the dark red circle below.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
If that is going to happen, and if the holiday seasonality sticks to its historical averages, today (Wed.) and Friday would be the best candidates for more selling as they are the weaker days surrounding the 4th of July. But even those negative days aren't all that bad. Of course seasonality is rarely considered a primary indicator.
Chart provided courtesy of www.sentimentrader.com
Yesterday's weaker than expected Consumer Confidence report didn't have much of a negative effect on the market, but historically that's not a surprise. When we get a low Consumer Confidence report while the S&P 500 is trading above the 200-day moving average (simple average in this case) the market has a pretty good record going forward.
Chart provided courtesy of www.sentimentrader.com
That's quite a few double digit returns looking out 3 to 6 months. The problem is, over the last couple of years there are a lot more red numbers on that list then there were in earlier years.
A quick look at bonds shows that the yield on the 10-year treasury is still struggling to get back above the 20-day EMA. Like the S&P 500, there is what could be considered an inverted head and shoulders pattern, and like the S&P 500, it could either breakout or test the head of the H&S.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Chances are the S&P and the 10-year yield will break in the same direction, but of course yields move counter to bond prices and the F-fund so whichever way yields break, the F-fund will do the opposite.
Tomorrow (Thurs.) we should have the Supreme Court ruling on the healthcare law so we'll see what that brings.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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