10/26/12
Yesterday the Dow let an early 85-point gain completely slip away by early afternoon, but by the close the bulls were able to push the indices back into positive territory. The Dow closed up 26-points. [TABLE="width: 88%, align: center"]
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[TD="align: center"] Daily TSP Funds Return[TABLE="width: 150"]
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[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0036%[/TD]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] -0.21%[/TD]
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[TD="align: right"] C-fund:[/TD]
[TD="align: right"] 0.30%[/TD]
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[TD="align: right"] S-fund:[/TD]
[TD="align: right"] 0.24%[/TD]
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[TD="align: right"] I-fund:[/TD]
[TD="align: right"] 0.29%[/TD]
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[TABLE="width: 80%, align: center"]
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[TD="align: right"] [/TD]
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The S&P 500 put in an outside day yesterday (the high was higher than the prior day's high, and the low was lower than the prior day's low) but the close was near the middle of the day's range so it did not give us any indication which side this favors - the up or down side.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The modest move higher off of the recent low in the Russell 2000 may be considered a bear flag, which is not usually a positive formation. Particularly with the major indices are trading below their 50-day EMA's, but in the short-term it is possible to see the flag continue to drift upward for a few days, and if the move higher is not substantial, could eventually break down as a bear flag normally does.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The market has now gotten past the rough patch in the October seasonality chart, and now actually begins a rather positive stretch, which will go right into the early part of November.
Chart provided courtesy of www.sentimentrader.com
Seasonality usually takes a back seat to the stock index charts so the bear flag may have an eventual edge on the the above data. But with this very close election now less than 2 weeks away, who the heck knows how this will play out?
Here is one for the bulls: Volume in inverse ETF's, which are bets that the market is going to move down, have reached a level that may suggest that this group of [most likely] dumb money, is betting comparatively heavy on the market going down. For these purposes, sentimenTrader.com is looking at volume in the most-established bear-market ETFs (PSQ, DOG, SH, QID, DXD and SDS). These have the longest history, with the most volume and assets under management.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I can't help but notice that prior instances when this indicator indicator reached 0.58%, the NYSE had pulled back a much greater percentage than what we see today. This current pullback has barely broken the uptrend. sentimenTrader.com concluded: "We'd rate this as a low-priority positive for stocks now. Due to the short history and questionable short-term performance after a couple of the precedents, we can't give it a higher priority."
Apple reported earnings after the close on Thursday and it was sort of a mixed bag. The stock did not soar, nor drop like a rock in after hours trading. It basically traded within about a 1% range of where it had closed on Thursday, so that probably won't have much of an impact on today's (Friday) action. Amazon's stock did get hit hard after earnings, but it isn't the market mover that Apple is, although the overnight futures are down quite a bit.
The TSP Talk Sentiment Survey came in at 49% bulls, 40% bears, for a bulls to bears ratio of 1.23 to 1. That is a Buy signal which means the system will remain in a 100% S fund allocation for next week.
Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
