06/24/13
Stocks stabilized on Friday after the 2-day, 550+ point drop in the Dow during the previous two trading sessions. The Dow gained 41-points and the S&P 500 saw a modest gain, but small caps and the I-fund finished in the red again.
[TABLE="width: 88%, align: center"]
[TR]
[TD="width: 305"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 153"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0050%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] -0.45%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] +0.27%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -0.06%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.68%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
As I have been saying, I am ignoring my normal analysis routine until I see this 1987 comparison end. The comparison won't be exact, but we are looking for similar reactions from investors to similar situations, to shape the chart.
Last week the S&P 500 broke down from a small rising wedge (blue) and broke below the longer-term support line (red) and so far has been finding support on the old short-term descending resistance line (black).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
After breaking below a rising wedge (blue) and falling below the longer-term support line (red) in 1987, the S&P 500 rallied back up to that red support line, and it turned out to be strong resistance and in fact was the peak after the initial breakdown from that long-term support. If that happens this week we could see a move up to the 1620-1625 area on the S&P. I'm not sure I would count on that, but it would fit the 1987 playbook.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So what would it take to get me off the 1987 comparison kick? A move above the prior peak, which is the blue line marked #1 below, and hopefully a move above the blue line marked #2. That would certainly nullify the comparison.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
To add to the drama, last week we saw the 6th Hindenburg Omen Signal since mid-April. We talked about signal # 5 the prior week, so #6 keeps this ominous signal alive.
From Wikipedia: "The Hindenburg Omen is a combination of technical factors that attempt to measure the health of the NYSE, and by extension, the stock market as a whole. The goal of the indicator is to signal increased probability of a stock market crash.
"The rationale is that under "normal conditions" a substantial number of stocks may set either new annual highs or new annual lows, but not both at the same time. As a healthy market possesses a degree of uniformity, whether up or down, the simultaneous presence of many new highs and lows may signal trouble."
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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