10/27/11
The market continues to move in sympathy with the news out of Europe. Some midday concerns turned into optimism after China threw their hat in the ring. The market rose, sank, and rose again on the changing headlines. The Dow closed up 162-points.
For the TSP, the C-fund was up 1.05% yesterday, the S-fund gained 1.49%, the I-fund added 1.24%, and the F-fund (bonds) lost 0.23%.
The S&P 500 popped back above the 200-day EMA after briefly breaking below it and the bottom of the rising wedge. Despite the positive close, the S&P made a lower high and a lower low on the day so it will have to move above yesterday's highs to break the two day downtrend. Should the rally continue, the 1270 area looks to be the next area to test.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The MACD indicator is giving a bit of a negative divergence in that it has been moving lower over the last week or two, despite the S&P moving higher.
The Nasdaq was down quite a bit yesterday before rebounding strongly and creating a nice kangaroo tail reversal pattern. It temporarily moved below the 200-day EMA but closed back above it.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The Rydex Cash Flow ratio continues to show that investors are getting more and more bullish, finally embracing a rally, and with gusto. There is a trend to this indicator and the ratio is now testing the top of its descending range. Does that mean stocks will fall? Maybe, but not necessarily. We could be seeing a change in the trend, but at this point that is an assumption.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The Wall Street Sentiment Survey used to be considered a smart money indicator but you can see that when this group hits the 60% bullish area, the market is about ready for a pullback. Last week it hit 54% AND THE survey is updated on Fridays so we'll have to see if they make it to 60% this week.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
We get some new GDP numbers today, which could be a market mover, and as I mentioned yesterday, next week is the October jobs report and an FOMC meeting. But of course we don't need to concern ourselves with any of that as long as Europe is calling the shots around here... just kidding.
Update 1:43 AM ET: The futures are blasting off again over a Greek debt deal:
Euro zone strikes deal on second Greek package
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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