08/18/11
Stocks were mixed yesterday as the Dow and S&P 500 managed small gains, while the leaders, the Nasdaq and Dow Transports, each lost about a half of a percent.
It was a little wild at times as we saw a 125 gain turn into an 84 point loss before the Dow closed at +4.
For the TSP, the C-fund gained 0.12% yesterday, the S-fund lost 0.36%, the I-fund was up 0.61%, and the F-fund (bonds) added 0.18%.
The S&P 500 closed flat after another volatile, low volume, late summer trading day. Probably the most significant development yesterday was the 50-day EMA crossing below the 200-day EMA for the first time since last August. This "death cross" is what I use as the "official" bear market signal, but of course but nothing is an absolute in the market. It is not an instant gratification indicator and is more of a warning to probably err on the side of being too cautious, as opposed to being too aggressive.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
During the summer of 2010 we saw the 50 and 200 day EMA's cross 4 times; two were death crosses (50 below 200) and two were golden crosses (50 above 200). During this period it was more of a whipsaw as it didn't give us much of an advantage until the final golden cross in September when we were given the bull market green light and the market rallied for several months afterward.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
In 2008 it was a different story. We got the death cross in January of '08 and it did turned out to signal a very serious bear market that did not bottom for another 14-months.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So we have an official warning but that doesn't mean you have to sell everything right now and until the 50-day EMA moves back above the 200-day EMA, but in a bear market we might start to expect a more bearish outcome from certain situations. We might expect a double bottom to hold in a bull market and we would get aggressive buying, but in a bear market we might instead prepare for a breakdown of a double bottom. Things like that.
It also changes our buy and sell signal criteria for our Sentiment Survey System, as buy signals become a little tougher to achieve, and sell signals come a little quicker.
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 were mixed yesterday as the Dow and S&P 500 managed small gains, while the leaders, the Nasdaq and Dow Transports, each lost about a half of a percent.
It was a little wild at times as we saw a 125 gain turn into an 84 point loss before the Dow closed at +4.
For the TSP, the C-fund gained 0.12% yesterday, the S-fund lost 0.36%, the I-fund was up 0.61%, and the F-fund (bonds) added 0.18%.
The S&P 500 closed flat after another volatile, low volume, late summer trading day. Probably the most significant development yesterday was the 50-day EMA crossing below the 200-day EMA for the first time since last August. This "death cross" is what I use as the "official" bear market signal, but of course but nothing is an absolute in the market. It is not an instant gratification indicator and is more of a warning to probably err on the side of being too cautious, as opposed to being too aggressive.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
During the summer of 2010 we saw the 50 and 200 day EMA's cross 4 times; two were death crosses (50 below 200) and two were golden crosses (50 above 200). During this period it was more of a whipsaw as it didn't give us much of an advantage until the final golden cross in September when we were given the bull market green light and the market rallied for several months afterward.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
In 2008 it was a different story. We got the death cross in January of '08 and it did turned out to signal a very serious bear market that did not bottom for another 14-months.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So we have an official warning but that doesn't mean you have to sell everything right now and until the 50-day EMA moves back above the 200-day EMA, but in a bear market we might start to expect a more bearish outcome from certain situations. We might expect a double bottom to hold in a bull market and we would get aggressive buying, but in a bear market we might instead prepare for a breakdown of a double bottom. Things like that.
It also changes our buy and sell signal criteria for our Sentiment Survey System, as buy signals become a little tougher to achieve, and sell signals come a little quicker.
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.
