Stocks did not get off to a good start yesterday, but the bulls picked up momentum and we saw the indices close near the highs of the day. The Dow gained 59-points on the day and the S&P 500 closed above 1400.
For the TSP, the C-fund was up 0.60% yesterday, the S-fund gained 0.87%, the I-fund added 0.75%, and the F-fund (bonds) was up 0.08%.
The headlines might say that the rally was triggered by a sharp drop in oil prices after news that the U.S. and the U.K. were working on a deal to release their strategic petroleum reserves. That may have been the reason the S&P 500 moved above 1400, but oil did not stay down for long, yet stocks were able to close near their highs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The chart of oil would suggest higher prices in the future and the news of tapping the reserves only sent oil prices down temporarily as it closed down just 0.4% after being down almost 3.0% earlier in the day.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It was able to close above the 20-day EMA and this pullback from the February highs sure looks like a big old bull flag to me. It's possible that short term rumors or ploys to lower prices could move the oil contracts down to their 50-day EMA near $103, but if the bull flag plays out we have a projection of somewhere near $125. And if you recall, there is a large inverted head & shoulders on the longer term chart that had projection above that level.
The drop in oil prices helped push the Dow Transportation Index up to its prior highs before backing off a bit. We had mentioned on Thursday that the pullback on Wednesday saw the Transports testing a double dose of support and clearly the index passed the test this time around. Now it just has to deal with making new highs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The TSP Talk Sentiment Survey came in at 52% bulls, 38% bears, for a bulls to bears ratio of 1.37 to 1. That is neutral reading which means the system will remain 100% S Fund for next week.
One last thing. Remember, the end of this week of options expirations seems to be the end of the better half of March historically. Today is the 12th trading day in March.
Chart provided courtesy of www.sentimentrader.com
Thanks for reading! Have a great weekend!
Tom Crowley
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