12/29/11
Stocks pulled back sharply yesterday on light, holiday volume. More concerns in Europe sent the euro down and the dollar up, putting pressure on the U.S. markets. The Dow lost 140-points.
For the TSP, the C-fund lost 1.22% yesterday, the S-fund dropped 1.87%, the I-fund was down 1.31%, and the F-fund (bonds) gained 0.43%.
The indices can be pushed around a lot more easily when volume is very light and the bears came out of hibernation to do some pushing. As we head into the final two days of trading, we'll have to see who can do the pushing.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The indicators may be showing that the bears are in charge, but seasonality suggests the bulls tend to control these two days.
You can see below that while the 5-days of trading prior to the New Year's Day NYSE holiday (which would be days -5 through -1) are quite positive -and the most positive 5-day period of the year, day # -3 (Wednesday) was the day that saw the lowest percentage of being positive of the 5 days. It had been positive about 56% of the time while day -2 and day -1 were positive 67% and 65% of the time respectively. Of course that also means that they were negative over 30% of the time so there are no guarantees.
Chart provided courtesy of www.sentimentrader.com
And as we talked about yesterday, this Friday is rated a 4 out of 4 on Sentimentrader.com seasonality indicator. This takes into consideration things like the month of the year, day of the week, presidential cycle we are in, 6-month cycle, relation to holidays, etc., and comes up with a seasonality strength rating for each day of the year. It ranges from 0 (worst) to 4 (best). Only one day in all of 2011 and 2012 was rated as a 4, and that happens to be December 30, 2011. This is purely based on seasonality...
Data provided courtesy of www.sentimentrader.com
The dollar bounced off of the support of the recent rising trading channel and yesterday filled the overhead open gap; busting right through it. Now the only open gaps on this chart of the UUP (a dollar ETF) are down below. Those may be eventual targets but the rising trend would have to be broken first.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Clearly yesterday proved that the bears are not totally dead this week and the charts and indicators do show concern for the short-term, but I still think there are money managers at the ready to do some buying, if not today, then tomorrow. Many fund managers underperformed this year and they want to show winners in their annual reports, so I look for them to buy stocks, particularly the ones that did well in 2011.
Remember, we haven't seen the S&P 500 close in negative territory during the 3rd year of a president's term since 1939 and with two days of trading left in 2011 and Obama's 3rd term, the S&P 500 is down about a half of one percent .
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
Stocks pulled back sharply yesterday on light, holiday volume. More concerns in Europe sent the euro down and the dollar up, putting pressure on the U.S. markets. The Dow lost 140-points.
For the TSP, the C-fund lost 1.22% yesterday, the S-fund dropped 1.87%, the I-fund was down 1.31%, and the F-fund (bonds) gained 0.43%.
The indices can be pushed around a lot more easily when volume is very light and the bears came out of hibernation to do some pushing. As we head into the final two days of trading, we'll have to see who can do the pushing.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The indicators may be showing that the bears are in charge, but seasonality suggests the bulls tend to control these two days.
You can see below that while the 5-days of trading prior to the New Year's Day NYSE holiday (which would be days -5 through -1) are quite positive -and the most positive 5-day period of the year, day # -3 (Wednesday) was the day that saw the lowest percentage of being positive of the 5 days. It had been positive about 56% of the time while day -2 and day -1 were positive 67% and 65% of the time respectively. Of course that also means that they were negative over 30% of the time so there are no guarantees.
Chart provided courtesy of www.sentimentrader.com
And as we talked about yesterday, this Friday is rated a 4 out of 4 on Sentimentrader.com seasonality indicator. This takes into consideration things like the month of the year, day of the week, presidential cycle we are in, 6-month cycle, relation to holidays, etc., and comes up with a seasonality strength rating for each day of the year. It ranges from 0 (worst) to 4 (best). Only one day in all of 2011 and 2012 was rated as a 4, and that happens to be December 30, 2011. This is purely based on seasonality...
Data provided courtesy of www.sentimentrader.com
The dollar bounced off of the support of the recent rising trading channel and yesterday filled the overhead open gap; busting right through it. Now the only open gaps on this chart of the UUP (a dollar ETF) are down below. Those may be eventual targets but the rising trend would have to be broken first.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Clearly yesterday proved that the bears are not totally dead this week and the charts and indicators do show concern for the short-term, but I still think there are money managers at the ready to do some buying, if not today, then tomorrow. Many fund managers underperformed this year and they want to show winners in their annual reports, so I look for them to buy stocks, particularly the ones that did well in 2011.
Remember, we haven't seen the S&P 500 close in negative territory during the 3rd year of a president's term since 1939 and with two days of trading left in 2011 and Obama's 3rd term, the S&P 500 is down about a half of one percent .
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
