2/07/12
Yesterday was a rather boring day with a minor hiccup in the indices. That is just what the bulls would want - a low volume dip that the bears could not jump on, despite some concerning news out of Europe. The Dow lost 17-points on the day.
For the TSP, the C-fund slipped 0.04% yesterday, the S-fund dipped 0.11%, the I-fund lost 0.57%, and the F-fund (bonds) gained 0.26%.
The action was nothing to worry about yet, but the flat top can be a concern if we don't see a higher high today. Many times you get a big rally, a slow day, then a pullback, but we are so due for one I think the bulls would welcome it.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq Composite Index is probably the most overbought of all of the major indices, although in a strong trending market overbought/oversold indictors are not always the best tools to use. I lean toward an MACD type indicator in this type of market so I may start posting that in the coming days.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The last three times the Nasdaq hit overbought levels this high, the index did pull back, but the time prior to that in early 2010, we had a strong rising trend and , you can see that the Nasdaq barely budged before the rally resumed.
With there being less to talk about lately, I decided to post a chart of gold - via the ETF GLD. Gold has been in a strong rising trend - rising along with the stock market, but it has pulled back to support and may be ready for another move higher.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It would be helped if we see the 200-day EMA give way on this chart of the dollar ETF (UUP). You can see the 20-day EMA crossed below the 50-day EMA so the dollar is starting to break down a little. The 20 and 50 EMA's could easily act as resistance on any rally.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The stock market may be ready for a little rest here, which of course I have been saying for some time now, but I wouldn't expect anything major on the downside. 5% would be a gift if you ask me, and may be too much to ask. The 50-day EMA is less than 3% below where the S&P is now, so I'd take that.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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