11/14/11
Stocks rallied on both Thursday and Friday last week as changes in the leadership of Greece and Italy springs optimism.
For weekly and monthly TSP returns, please see our recent TSP Weekly Wrap-Up.
The Dow gained 260-points on Friday after picking up 113 on Thursday. Because of the holiday, the TSP share prices were not updated on Friday so we will see the gains reflected in Monday's share prices.
S&P 500 is looking bullish and with the overnight futures looking very positive as I write this on Sunday night, the overhead resistance could be taken out if the gains hold into this morning's open.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I talked about the various trends, trading channels, and the triangle formation in this weekend's Weekly Wrap-Up so I won't repeat it. If you missed it you may want to take a look.
One thing I am seeing as a possible concern is the recent spike in the price of oil. Oil tends to go up when stocks go up for a couple of reasons. One is that if the economy is improving, there is a higher demand for oil.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Another reason is that stocks and oil tend to go up when the dollar is falling. With oil sitting near $99 a barrel and the dollar looking like it may want to break down, we could be looking at prices well over $100 again in the near future.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We don't usually mind seeing oil go up as long as stocks are moving up as well, but there comes a point when the price of oil becomes a burden on the U.S. consumer and stocks may not appreciate that.
The catalyst for stocks over the last several weeks has been Greece and more recently, Italy's 10-year bond yield, but if we start seeing triple digits in the price of oil again, that stock market catalyst may change.
Another catalyst could be the Super Committee and their attempt to trim $1.2 Trillion from our deficit. Their deadline is November 23, so let's hope that this does not interfere with what is historically a very strong seasonal period for stocks as the latter half of November tends to do very well.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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