6/20/12
Stocks rallied again on Tuesday with the Dow posting another near 100-point gain. The S&P has now been up 4 days in a row so the pressure of being overbought may start to kick in.
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[TD="align: center"] Daily TSP Funds Return
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[TD="align: right"] G-Fund:
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[TD] +0.004%
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[TD="align: right"] F-fund:
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[TD] - 0.10%
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[TD="align: right"] C-fund:
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[TD] +0.98%
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[TD="align: right"] S-fund:
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[TD] +1.46%
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[TD="align: right"] I-fund:
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[TD] +1.48%
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The S&P 500 is certainly perking up as it has been passing through resistance with ease. The current resistance level, which is the lows made in April, was taken out intraday yesterday, but the S&P closed right on it.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It's possible that we have some rising wedges being formed and that is creating a little more resistance, so that 1360 seems to be an important area if this rally is going to continue.
Small caps have done well lately and as you can see, the Russell 2000 took out both the 50-day and the 200-day EMA's yesterday. Like the Transports, the Russell is a leader and both of those indexes have exploded recently.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The trouble now for stocks is that they are getting overbought. This isn't much a problem in a bull market, but if this intermediate-term downtrend is going to continue, the overbought reading will be a concern. Time will tell, and we should know soon enough.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here are more overbought oscillator-type indicators, all showing the same story. Rising but getting overbought.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Today is the end of the 2-day FOMC meeting and according to sentimenTrader.com:
"If the S&P 500 was up 3 days in a row heading into a FOMC meeting, it also closed up that day 15 out of 15 times, averaging +1.0%. The day after was up 53% of the time and 3 days later 46% of the time, so the momentum heading into the meetings more often than not relaxed a bit in the days following."
As we have been talking about, the post-option expiration week in June has been down 9 years in a row, and now today we have a 15 of 15 positive trend on the line. Something may have to give. If both trends stay intact, we could have a positive day on Wednesday, and then see the market give back all of the week's gains on Thursday and Friday.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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