Testing Bull Market Support
The S&P 500 had to hang onto some modest games on Friday just to avoid a 7[SUP]th[/SUP] consecutive week of losses.
For the TSP, the C-fund was up 0.10% for the week. The S-fund lost 0.17%, and the I-fund was down 0.94% as the dollar rebounded on the weak economic news coming out of Europe. Bonds (F-fund) were flat, and the G-fund was up 0.05%.
For the month, the C-fund is down 5.38%, the S-fund has lost 7.37%, and the I-fund has given up 4.80%, while bonds (F-fund) are up 0.27%, and the G-fund is up 0.12% in June.
Looking at the chart of the S&P 500, we have had many warning signs that a correction could be brewing. We saw the S&P 500 drop below the 20-day EMA, then the 50-day EMA. We saw the rising trend lines broken, and then saw the 20-day EMA fall below the 50-day EMA.
Normally we would be seeing some oversold rallies at this point, but this market stubbornly refused to give any relief, except for an occasional one day bounce. That has been the frustrating part for any market timers looking for an opportunity to sell strength during this correction. We just haven’t seen the rebounds despite the indicators suggesting we should.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
On the positive side, the recent correction (A correction is actually defined as a 10% pullback from the highs, and we’re not quite there yet) is running into some strong support and how the S&P 500 handles this support could determine if this correction in this bull market is actually going to turn into something more serious, i.e. a bear market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I’ve drawn in two trend lines that should act as decent support, and they are in the vicinity of 1240 to 1260, and of course the 200-day EMA is sitting near 1263. This should give the market some cushion but as I said, should the S&P 500 cut below these levels, it will be time to take a much more defensive stance.
A defensive stance to me means moving from a “buy the dips” mentality where you might err on the side of being too bullish, to a “sell the rallies” mentality where you want to avoid being overly aggressive. We are not there yet.
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.
The S&P 500 had to hang onto some modest games on Friday just to avoid a 7[SUP]th[/SUP] consecutive week of losses.
For the TSP, the C-fund was up 0.10% for the week. The S-fund lost 0.17%, and the I-fund was down 0.94% as the dollar rebounded on the weak economic news coming out of Europe. Bonds (F-fund) were flat, and the G-fund was up 0.05%.
For the month, the C-fund is down 5.38%, the S-fund has lost 7.37%, and the I-fund has given up 4.80%, while bonds (F-fund) are up 0.27%, and the G-fund is up 0.12% in June.
Looking at the chart of the S&P 500, we have had many warning signs that a correction could be brewing. We saw the S&P 500 drop below the 20-day EMA, then the 50-day EMA. We saw the rising trend lines broken, and then saw the 20-day EMA fall below the 50-day EMA.
Normally we would be seeing some oversold rallies at this point, but this market stubbornly refused to give any relief, except for an occasional one day bounce. That has been the frustrating part for any market timers looking for an opportunity to sell strength during this correction. We just haven’t seen the rebounds despite the indicators suggesting we should.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
On the positive side, the recent correction (A correction is actually defined as a 10% pullback from the highs, and we’re not quite there yet) is running into some strong support and how the S&P 500 handles this support could determine if this correction in this bull market is actually going to turn into something more serious, i.e. a bear market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I’ve drawn in two trend lines that should act as decent support, and they are in the vicinity of 1240 to 1260, and of course the 200-day EMA is sitting near 1263. This should give the market some cushion but as I said, should the S&P 500 cut below these levels, it will be time to take a much more defensive stance.
A defensive stance to me means moving from a “buy the dips” mentality where you might err on the side of being too bullish, to a “sell the rallies” mentality where you want to avoid being overly aggressive. We are not there yet.
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.
