7/27/12
Stocks rallied sharply yesterday on some positive comments from European Central Bank chief vowing to hold the euro zone together. We also saw a better than expected initial jobless claims report. The Dow gained 212-points.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return
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[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD] +0.004%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD] - 0.03%
[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD] +1.66%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD] +1.15%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD] +3.40%
[/TD]
[/TR]
[TR]
[TD="colspan: 2, align: right"]
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
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The S&P 500 bounced off of the support line of the rising trading channel. The question now is whether this new upward momentum can take the index back to the top of its current trading range.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq moved up into the large open gap intraday, but closed just below it. As we know gaps tend to get filled sooner rather than later so I wouldn't be surprised to see this one get filled in the next couple of trading days. But even it it does get filled, many times a filled gap acts as resistance so we'll have to see if the Nasdaq can take out the top of that gap and test the prior July highs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The rally took the NYSE overbought / oversold indicator out of oversold territory and back to a neutral reading. No advantage here for either the bulls or bears.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Our TSP Talk sentiment survey also came in at a neutral reading with a bulls (52%) to bears (40%) ratio of 1.28 to 1. That is close to the overly bearish side during a bull market, but just into neutral territory.
The AAII Survey has been very bearish lately, which is usually a bullish sign for stocks.
Chart provided courtesy of www.sentimentrader.com
Using a 12-week average, there were only four other times over the past 15 years when the AAII sentiment got this bearish. The S&P 500 did very well over the next three months in each case:
- October 14, 1998: +27%
- March 5, 2003: +15%
- March 5, 2008: +4%
- March 4, 2009: +27%
Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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