9/25/12
Stocks saw modest losses throughout most of the day yesterday and an afternoon spike was sold late in the day and the Dow closed down 20+ points.
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[TD="width: 241"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 151"]
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[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0100%[/TD]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] 0.16%[/TD]
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[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -0.22%[/TD]
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[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -0.49%[/TD]
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[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.69%[/TD]
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[TD="align: right"] [/TD]
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The yawns continue as we reached 6 consecutive days of sideways action. The top of the rising trading channel acted as support again. This looks like a good spot for a breakout or a breakdown. Spain's debt and weak German business data seems to be the concern right now.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index did bounce 1% yesterday; moving back into the recent trading range and at least for now, holding off on any breakdown, if that is what it is planning to do.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The sideways action took most of the oscillator type indicators off of their overbought levels.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
According to sentimenTrader.com: "Small options traders have become more interested in betting on a market rally. They have established their most aggressive bets on the market since the spring."
This is generally a contrarian indicator, and as you can see below, when this indicator hits 0.50 (a 2 to 1 call to put ratio), the market has run into some trouble.
Chart provided courtesy of www.sentimentrader.com
"ROBO stands for Retail-Only, Buy to Open. This means that it only includes retail traders, which is defined as the smallest ones in the market (trading 10 contracts or less at a time). Buy to Open means that we're only including those transactions where traders are opening new trades, and not closing an existing one."
"Sentiment has been stretched further than this a few times over the past three years, but the arrows on the chart highlight those times when the ratio hit the 2-to-1 threshold where it rests now.
"With only two exceptions, the market soon went into corrective mode, although in two more instances in 2009, the corrections lasted only two weeks."
So this may not be an instant gratification indicator, but in the past it has led to some corrections.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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