2/22/12
Stocks struggled for direction yesterday as the strong open quickly failed. The dip buyers showed up but could not hold the gains. A late rally took the indices off of their lows, and in the case of the Dow and S&P 500, closed in positive territory.
For the TSP, the C-fund was up 0.07% yesterday, the S-fund lost 0.53%, the I-fund gained 1.02%, and the F-fund (bonds) fell 0.09%.
It looked like we were getting a "sell the news" reaction to the bailout in Greece, but the bears could not keep the pressure on. Those bears did step in when the Dow crossed 13,000 for the first time in several years and at the same time, the S&P 500 was hitting the 2011 highs. This could be a prime place for a little selling, if the bulls will allow it.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index continues to lag as it lost 1.5% yesterday and is being hurt by the rising price of oil. The index made a lower low yesterday, and temporarily dipped below the 50-day EMA. This is certainly looking more like a rounded top rather than a pullback.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 50-day EMA really needs to hold or the 200-day EMA will probably be next.
The yield on the 10-year T-Note moved back above 2% yesterday as the dance above and below that level continues. Over the last few months, 1.8% has been the support area and we have had a slowly declining resistance, which is currently being tested.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Of course bond yields move inversely to bond prices and the F-fund, so if we see a breakout to the upside in yields, it will be bearish for the F-fund. If resistance holds and we start to see a pullback toward 1.8% again, it will be bullish for the F-fund.
Gallup came out with the results of its February mid-month employment survey and the polling company says that this survey "normally reflects what the U.S. government reports for the entire month." In January the mid-month survey was 8.3% and of course the January jobs report came up with the same figure. The bad news is that February's mid-month survey showed an unemployment rate of 9.0%. If that holds, and the numbers will be released on March 9, we have to wonder how the stock market will react.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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