09/30/11
Can you believe the volatility? Stocks closed higher yesterday to the tune of 143 Dow points, but that was nearly 120 points off of the high, and 190-points off of the low. The indices were mixed as the Nasdaq closed in negative territory.
After opening up very strongly, the indices drifted lower for almost the entire day, before a late surge took them well off of their lows.
For the TSP, the C-fund was up 0.82% yesterday, the S-fund gained 0.92%, the I-fund jumped 2.21%, and the F-fund (bonds) added 0.17%.
Although the late rally does give us some positive momentum going into Friday's trading, yesterday's (Thursday) wild action looks neither impressive nor menacing on the chart. All I see is another failed attempt at the 20-day EMA with a lower high and a lower low.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq actually closed down on the day, but well off of the lows, which created a nice kangaroo tail reversal. But it is still below the 20-day EMA and the rising resistance line.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The leading index, Dow Transportation Index had a very nice day on Thursday, gaining over 2% on the day, but its chart looks as bad as any of them despite still trading above the August lows.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Monday is the start of October and the 4th quarter. Seasonally, the early part of October tends do be better than average, but as always, seasonality should not be used as a primary indicator. I look seasonality as a breeze at the back of, or in the face of, a bicycle rider. If it's in your face it will make things slightly tougher for you and if it's at your back it will help, but it won't decide your direction.
Chart provided courtesy of www.sentimentrader.com
October has a reputation as being a bad month because of a few infamous crashes, but during the 56-year period from 1950 to 2005 it is really not too bad at all as far how often it is up or down historically.
Chart provided courtesy of www.sentimentrader.com
... and the average return is actually above the monthly average of all months.
Chart provided courtesy of www.sentimentrader.com
It's been a wild week and a month, and we still have another day left. I had predicted a rally by the end of the week, but the week did not develop the way I had envisioned. It is leaving myself, and many other investors, waiting for the capitulation that usually puts an exclamation point on a bear market. Or at least triggers a strong rally.
But we haven't had that so we're left continually looking over our shoulders anticipating it. Can the market drift higher with this hanging over it? Yes, but it probably means we will have to revisit the lows some time down the road. Not a good feeling. Let's get it over with.
Thanks for reading! Have a great weekend!
Tom Crowley
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