5/08/12
After putting up some big negative numbers in the overnight futures trading on Sunday night, stocks managed to crawl back with most indices posting small gains on the day, although the Dow did drop 30-points. This was quite a relief for the bulls as another decline would have all but killed the technical picture for stocks.
For the TSP, the C-fund was up 0.04% yesterday, the S-fund gained 0.21%, the I-fund made 0.03%, and the F-fund (bonds) added 0.01%.
The S&P 500 finished slightly higher on the day, and it did not break below the horizontal support line connecting the prior lows. The bad news is, this is day two below the 50-day EMA and the longer-term rising support line.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
As I mentioned yesterday, we knew the open was going to be weak, but it was the close that I was interested in seeing. The open took the Dow below its rising trading channel, which may be a bear flag, but by the close it was back within the support line and basically sitting at the 50-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar showed more strength yesterday, but it did the opposite of what stocks did by creating a reversal day to the downside.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
That reversal helped keep oil from having another bad day as it put in a positive reversal day, however, the 200-day EMA may be some trouble on the upside. I watch the price of oil as a barometer of the economy and if the price gets extreme, as a possible obstacle for consumer spending.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It seems that the U.S. is in a battle with the European countries for whose economy is going to be the weakest. The dollar is bouncing around and it is causing stocks and commodities to do the same. The Socialist party winning the presidency in France mixed things up a bit, and the battle between austerity measures and raising taxes is ongoing in many other European countries that are having trouble making ends meet. I don't think there's a doubt that the U.S. economy is in better shape, but we could have another summer of issues in Europe that will affect U.S. financial institutions and likely our stock market.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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