The dollar may lead the way
Stocks opened higher last week after the news of bin Laden’s death, but the emotional rally quickly failed and the major indices pulled back for most of the week.
The good news is the jobs report came in a little better than expected and the market rallied on Friday.
For the TSP, the C-fund lost 1.68 for the week, while the S-fund and the I-fund lost 2.8%. Bonds (F-fund) gained 0.58%, and the G-fund was up 0.05%.
So far we have seen a classic inverted head and shoulders pattern on the S&P 500 and should that continue we could see higher prices this week now that it has pulled back to test the neckline.
Chart provided courtesy of www.decisionpoint.com
The concern I still have is the open gap near 1315. Open gaps on the S&P 500 chart are very rare and have a big tendency to get filled eventually. Filling the gap would simply mean seeing the S&P 500 pull back to 1315 at some point, and that should actually act as support.
Gaps are usually filled sooner rather than later, but some take months, and on rare occasions do not get filled at all. It would be a good sign of strength for this market if this gap goes unfilled, but filling it would not be a terrible thing. I would actually prefer to see it get filled just to get it over with, but doing so would break the very bullish inverted head and shoulders pattern we have been following so closely.
I think the answer may be determined by what happens to the U.S. dollar. The dollar rallied strongly for the last two days after falling precipitously for weeks.
Chart provided courtesy of www.decisionpoint.com
A falling dollar actually helps stock prices so if this new found strength continues we may see the gap on the S&P 500 get filled. If the dollar finds resistance at the upper end of its descending trading channel and remains in its downtrend, we are more likely to see the S&P 500 bounce off of that neckline a begin a new leg higher.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
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.
Stocks opened higher last week after the news of bin Laden’s death, but the emotional rally quickly failed and the major indices pulled back for most of the week.
The good news is the jobs report came in a little better than expected and the market rallied on Friday.
For the TSP, the C-fund lost 1.68 for the week, while the S-fund and the I-fund lost 2.8%. Bonds (F-fund) gained 0.58%, and the G-fund was up 0.05%.
So far we have seen a classic inverted head and shoulders pattern on the S&P 500 and should that continue we could see higher prices this week now that it has pulled back to test the neckline.
Chart provided courtesy of www.decisionpoint.com
The concern I still have is the open gap near 1315. Open gaps on the S&P 500 chart are very rare and have a big tendency to get filled eventually. Filling the gap would simply mean seeing the S&P 500 pull back to 1315 at some point, and that should actually act as support.
Gaps are usually filled sooner rather than later, but some take months, and on rare occasions do not get filled at all. It would be a good sign of strength for this market if this gap goes unfilled, but filling it would not be a terrible thing. I would actually prefer to see it get filled just to get it over with, but doing so would break the very bullish inverted head and shoulders pattern we have been following so closely.
I think the answer may be determined by what happens to the U.S. dollar. The dollar rallied strongly for the last two days after falling precipitously for weeks.
Chart provided courtesy of www.decisionpoint.com
A falling dollar actually helps stock prices so if this new found strength continues we may see the gap on the S&P 500 get filled. If the dollar finds resistance at the upper end of its descending trading channel and remains in its downtrend, we are more likely to see the S&P 500 bounce off of that neckline a begin a new leg higher.
Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.
Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
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.
