06/27/13
Welcome to Bizarro World. A place where good news is bad, and bad news is good. That is about how I sum up yesterday's action after the Dow gained 150-points.
With GDP growth estimates at 2.4%, you would think that a stock market might be disappointed when the actual first quarter GDP figure is announced as 1.8%. But in Bizarro World, where the Fed will continue to buy bonds at high rates only if the economy is weak, the stock market rejoiced with a 1% gain.
[TABLE="width: 88%, align: center"]
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[TD="width: 305"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 153"]
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[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0050%[/TD]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] +0.26%[/TD]
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[TD="align: right"] C-fund:[/TD]
[TD="align: right"] +0.98%[/TD]
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[TD="align: right"] S-fund:[/TD]
[TD="align: right"] +0.72%[/TD]
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[TD="align: right"] I-fund:[/TD]
[TD="align: right"] +0.25%[/TD]
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[TD="align: right"] [/TD]
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The S&P 500 (via the SPY ETF) rallied 1% and found some resistance at the 50-day EMA. Yesterday's high on the SPY was 160.50 and the 50-day EMA is 160.58. If we are going to see some kind of significant correction, this looks like a good place for it. It wouldn't surprise me however, if the bears were frustrated for another day by one more upside push because the negative setup actually looks a little too perfect here, but I'm certainly not taking any chances at this point.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I put both the 50-day EMA (exponential moving average) and the 50-day SMA (simple moving average) on the chart below. These can be self-fulfilling prophesies and since traders follow both, we'll have to see which one has more resistance impact on the S&P.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We had talked about this relief rally possibly moving up to the 1620 - 1625 area, based on the resistance lines, and the 50-day MA's might work too with the 50-day EMA at 1611 and the 50-day EMA at 1619.
In the 1987 comparison, we are right there. If the comparison is going to continue, a sharp drop should happen any day now.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
As I have mentioned, the sentiment indicators are not giving any indication of any trouble. On the contrary. If the dumb money is on their normal wrong side (which is current very bearish) we should be seeing the market rally. But don't forget, we live in Bizarro World now.
Here is the historical seasonality chart sounding Independence Day, which has a pretty positive bias.
Chart provided courtesy of www.sentimentrader.com
The interesting thing here is that on Friday July 5th, the day after the holiday and a day where I assume trading volume will very very low, we get the June jobs report and during light volume trading, the indices can get pushed around quite a bit. In Bizarro World the market will probably sell-off on a good number, and rally on a bad number - unless stocks have already crashed by then.
Administrative Note: Starting next week, we should have a new service ready for you. Some of you may know our forum member Coolhand, who has been posting and writing blogs in the forum for us for nearly 9 years. He will be starting a free weekly report in the premium service area, which will be available to everyone who has a created a free premium login. Free is the key word, but you will have to login to view the reports.
At some point in the future, and we are targeting January 2014 as the start date, "Coolhand's Market Analysis" will become a full service daily subscription based premium service. If you don't have a login to the premium area yet, here is how to create one: Create Account. If you need help, please read FAQ #1, How do I sign up? Again, the first report won't be available until next week.
Also: The Ebbchart Premium Service will retire at the end of July so we won't be taking any new subscribers, or renewing monthly subscriptions come July 1. I want to thank ebbnflow for his years of dedicated reports and service. It has been a pleasure working with him. He is moving onto another endeavor and I wish him the best of luck!
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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