12/14/11
The Fed spoiled what looked like a positive day. After the policy statement was read, things went south in a hurry, but it seemed quite emotional so I'm very interested to see how investors react today. Emotional moves tend to reverse rather quickly.
The Dow lost just 66-points on the day and the loss in the S&P 500 was modest, but the more volatile small caps and international stocks were hit much harder.
For the TSP, the C-fund lost 0.85% yesterday, the S-fund dropped 1.84%, the I-fund fell 1.82%, and the F-fund (bonds) gained 0.15%.
Technically, the S&P closed above some key support, but it did fall below the 20 and 200-day EMA's and I'll take that as a warning sign. The 50-day is still holding, as is the descending support from the old resistance line, and the right shoulder of the inverted head and shoulders looks to be nearly done on the downside.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
A positive sign for stocks is that the VIX (volatility indicator) has not shown much concern for the recent selling. It actually went down yesterday despite the sell-off, and is below 26. When it gets above 30 it means investors are getting worried, but they are not. That is not a contrarian issue probably until it gets well below 20.
The Leader Dow Transportation Index also fell through the 20 and 200-day EMA's while holding at the 50-day EMA. It still looks OK, but we will need to see investors step up here at what looks like a decent place to buy - decent in that the risk / reward looks good. A break below the 50 EMA would probably be the sign to get out (limited loss), while the upside potential of the bull flag and the inverted H&S is about 500-700 points above where it closed yesterday (good upside potential).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
In yesterday's knee-jerk sell-off in stocks, the yield on the 10-year T-note moved below 2% again. This is another warning sign that we'd want to see reversed in the next couple of days.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Yesterday I mentioned that the strength in the dollar has been a surprise as the euro continues to get pummeled. Public opinion of the dollar has risen with its strength and it has reached a level that we normally see near tops in the dollar.
Chart provided courtesy of www.sentimentrader.com
Just like stocks, when sentiment in the dollar gets too high, it tends to be a better sell signal (for the dollar) than a buy signal. And as we have been seeing for quite a while now, when the dollar goes down, it has a positive effect on the price of stocks and commodities.
I will be pretty busy for the rest of the week. I plan to post the premium service reports as normally scheduled, but my commentary tomorrow may be brief if I can get to it at all. I also plan on doing a Weekly Wrap Up on the weekend, but it could be later than usual.
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.
The Fed spoiled what looked like a positive day. After the policy statement was read, things went south in a hurry, but it seemed quite emotional so I'm very interested to see how investors react today. Emotional moves tend to reverse rather quickly.
The Dow lost just 66-points on the day and the loss in the S&P 500 was modest, but the more volatile small caps and international stocks were hit much harder.
For the TSP, the C-fund lost 0.85% yesterday, the S-fund dropped 1.84%, the I-fund fell 1.82%, and the F-fund (bonds) gained 0.15%.
Technically, the S&P closed above some key support, but it did fall below the 20 and 200-day EMA's and I'll take that as a warning sign. The 50-day is still holding, as is the descending support from the old resistance line, and the right shoulder of the inverted head and shoulders looks to be nearly done on the downside.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
A positive sign for stocks is that the VIX (volatility indicator) has not shown much concern for the recent selling. It actually went down yesterday despite the sell-off, and is below 26. When it gets above 30 it means investors are getting worried, but they are not. That is not a contrarian issue probably until it gets well below 20.
The Leader Dow Transportation Index also fell through the 20 and 200-day EMA's while holding at the 50-day EMA. It still looks OK, but we will need to see investors step up here at what looks like a decent place to buy - decent in that the risk / reward looks good. A break below the 50 EMA would probably be the sign to get out (limited loss), while the upside potential of the bull flag and the inverted H&S is about 500-700 points above where it closed yesterday (good upside potential).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
In yesterday's knee-jerk sell-off in stocks, the yield on the 10-year T-note moved below 2% again. This is another warning sign that we'd want to see reversed in the next couple of days.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Yesterday I mentioned that the strength in the dollar has been a surprise as the euro continues to get pummeled. Public opinion of the dollar has risen with its strength and it has reached a level that we normally see near tops in the dollar.
Chart provided courtesy of www.sentimentrader.com
Just like stocks, when sentiment in the dollar gets too high, it tends to be a better sell signal (for the dollar) than a buy signal. And as we have been seeing for quite a while now, when the dollar goes down, it has a positive effect on the price of stocks and commodities.
I will be pretty busy for the rest of the week. I plan to post the premium service reports as normally scheduled, but my commentary tomorrow may be brief if I can get to it at all. I also plan on doing a Weekly Wrap Up on the weekend, but it could be later than usual.
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.
