01/23/12
Stocks were mixed on Friday as the Dow gained 97-points with help from the heavily weighted tech stocks, Intel, IBM, and Microsoft, all of whom reported strong earnings after the close on Thursday. However, the broader indices, S&P 500, Nasdaq, and Dow Transportation Index, were flat to down on the day.
For the TSP, the C-fund was up 0.07% on Friday, the S-fund added 0.03%, the I-fund gained 0.50%, and the F-fund (bonds) lost 0.17%.
For the weekly and monthly TSP returns, please see our recent TSP Weekly Wrap-Up.
The S&P 500 has been in a strong 4 - 5 week rally and we all know this can't last forever, but we don't know when it will end. The bull market can continue - I'm talking about the market moving higher without some kind of a pullback to the more solid support before staring another leg higher.
You can see that Thursday and Friday of last week tested some longer-term overhead resistance (red), and it is also at the top of the short-term ascending trading channel (blue), so we'll have to see how investors deal with that.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The indicators are clearly leaning toward the market being overbought / extended / overly bullish, you name it. Not one of the indicators that sentimenTrader.com follows is giving an extremely bullish reading, and 32% of them are giving an extremely bearish reading.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Bonds and the F-fund may finally be breaking down, although one day is not a deal breaker yet. But you can see that the yield on the 10-year T-Note finally closed back above 2% on Friday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bond prices and the F-fund move down when the yields move higher.
The TSP Talk Sentiment Survey came in at 49% bulls, 42% bears, for a bulls to bears ratio of 1.20 to 1. That is a fresh buy signal in a bull market (anything under 1.26 to 1) which means the system will remain 100% S Fund for this week.
Earnings will continue to come in this week and having rallied sharply into earnings season, there is a good possibility of a 'sell the news' reaction this week.
Thanks for reading! We'll see you here tomorrow.
Tom Crowley
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
