5/31/12
Stocks sold of yesterday as the Dow lost 161-points on - you guessed it - concerns out of Europe. This time it was the Spanish banks. This sell-off tosses the technical picture back into a more negative outlook.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"] G-Fund:
[/TD]
[TD] +0.005%
[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:
[/TD]
[TD] +0.38%
[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:
[/TD]
[TD] - 1.40%
[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:
[/TD]
[TD] - 1.95%
[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:
[/TD]
[TD] - 2.56%
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 is testing the 200-day EMA again and the negative bear flag (red) looks to be back in the picture. Should the index chop around and trade between the recent high and low (blue box), we could be in for another test the lows at some point so the breakout I mentioned yesterday was a head fake. I am someone optimistic that the lows will hold, just based on sentiment being so bearish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq found support at the 200-day EMA and that is the key here.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
A strong dollar is not the reason for the market's woes, but the dollar's strength does not help the price of stocks, particularly the I-fund which was down 2.6% yesterday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar is rallying in response to the weakness in the euro as the house of cards in Europe is still crumbling. It will be tough for the market to sustain any kind of rally if the euro continues to plummet.
As I mentioned the other day, weak markets coming off of very oversold conditions, will usually head back down if it starts to get just modestly overbought. I was looking for this as a test of the current rally off of the lows. So far it is not passing the test.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Yesterday's sell-off is a concern because of this, but as I said, I still think we may have seen the lows although a test is possible and actually healthy when trying to build a base.
Bonds and the F-fund rallied strongly yesterday as the yields plummeted again. We are at all-time lows for the 10-year yield and this is both surprising, and concerning.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds have been trying to top and have been overbought for such a long time, but they just refuse to rollover. With yields near 1.6%, wouldn't you think that stocks would be a better value? Apparently bond investors don't think so.
Friday is June 1st so I'll post the June seasonality chart one more time...
Chart provided courtesy of www.sentimentrader.com
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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