07/19/13
Stocks continue to defy gravity and the buy-and-hold crowd continue to benefit. The Dow gained 78-points, which was actually 41-points off the day's high, but with some heavy hitters reporting earnings after the close, there was some reason to take some profits. [TABLE="width: 88%, align: center"]
[TR]
[TD="width: 305"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 154"]
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[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0057%[/TD]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] -0.16%[/TD]
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[TD="align: right"] C-fund:[/TD]
[TD="align: right"] +0.51%[/TD]
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[TD="align: right"] S-fund:[/TD]
[TD="align: right"] +0.74%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] +0.50%[/TD]
[/TR]
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[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
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Those big names reporting earnings after the bell were Microsoft and Google, and both were hit hard in after hours trading. Microsoft, a Dow component, was down over 6% and Google was down over 4%. We'll have to see how investors react to that data during Friday's trading.
The S&P 500 pushed to new highs and finally closed above that May high. We know that this angle of incline can't go on forever, but as we have seen many times this year, it can go on longer than we might think reasonable.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We mentioned this before: The weekly chart saw two tests of the long-term rising trading channel back in 2011 before there was any significant pullback. Perhaps that is what is developing here?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There are no extreme readings by either the smart or dumb money in the put/call ratios, but clearly the dumb money is getting more bullish, while the smart money is buying more protection in case there is a downturn.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The smart money may not be bearish, but they do like to protect gains the more the market rises. On the other hand, the dumb money tends to get more and more aggressive as the market moves higher.
The yields did get a bit of a bounce off of the rising support line yesterday...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
... which meant bond prices and the F-fund pulled back. In the case of the long-term bond ETF (TLT) the 20-day EMA held again as resistance.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We are seeing signs that the herd is embracing the rally (finally) and that doesn't always mean an instant pullback, but the more heavily invested the herd is, the more sharply the market can fall if and when some bad news comes out. Until then, the buy and holders continue to have their day in the sun while market timers and traders are mostly being left out.
Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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