Keeping Investors on Their Toes
Just when we thought the charts were giving us some good inside information, which was that everything appears to be breaking down, the market pulled a fast one and rallied strongly last week, continuing to do what it does best – getting us to lean the wrong way.
For the week, the C-fund gained 3.57%, the S-fund jumped 5.59%, and the I-fund added 3.56%. Bonds (F-fund) were basically flat at +0.01% and the G-fund picked up 0.05%.
Last week we talked about the break down and pull back from resistance. The S&P 500 had fallen back below the 50 and 200-day exponential moving averages (EMA) and the technical picture looked bleak.
On Thursday and Friday of this past week, the market put in a strong performance and the technical picture has improved. It is not great – but improved. For one thing the S&P 500 is back above both the 50 and 200-day EMAs, but the 50 is still below the 200-day EMA, which is technically considered a bear market. Bear markets can produce strong rallies and we can’t be sure if this rally is going to be a fake out – or a potential move back into a bull market.
Charts provided courtesy of www.decisionpoint.com, analysis by TSP Talk
For our daily readers of TSP Talk this is going to be redundant as I talk about the 2007-2008 bear market all of the time for comparison reasons. If you look at the late 2007 / early 2008 action below, we saw similar whipsaws above and below the major moving averages. It was equally confusing at the time as the market seems to enjoy confusing us.
In early 2008 we saw the “death cross” where the 50-day EMA moved below the 200-day EMA, and that was a great clue to us that things were about to get very dicey. You can see that the S&P 500 was sitting at approximately 1475 when that occurred, and if you recall, the S&P 500 eventually fell to 666 by the time we saw a bottom in the bear market in early 2009.
Now I’m not saying that is going to happen again, but I take these signs (death cross, and EMA’s) very seriously because no one is going to knock on my door to let me know that a bear market is coming, so I look to the past for clues to help me with the future in the market.
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
Just when we thought the charts were giving us some good inside information, which was that everything appears to be breaking down, the market pulled a fast one and rallied strongly last week, continuing to do what it does best – getting us to lean the wrong way.
For the week, the C-fund gained 3.57%, the S-fund jumped 5.59%, and the I-fund added 3.56%. Bonds (F-fund) were basically flat at +0.01% and the G-fund picked up 0.05%.
Last week we talked about the break down and pull back from resistance. The S&P 500 had fallen back below the 50 and 200-day exponential moving averages (EMA) and the technical picture looked bleak.
On Thursday and Friday of this past week, the market put in a strong performance and the technical picture has improved. It is not great – but improved. For one thing the S&P 500 is back above both the 50 and 200-day EMAs, but the 50 is still below the 200-day EMA, which is technically considered a bear market. Bear markets can produce strong rallies and we can’t be sure if this rally is going to be a fake out – or a potential move back into a bull market.
Charts provided courtesy of www.decisionpoint.com, analysis by TSP Talk
For our daily readers of TSP Talk this is going to be redundant as I talk about the 2007-2008 bear market all of the time for comparison reasons. If you look at the late 2007 / early 2008 action below, we saw similar whipsaws above and below the major moving averages. It was equally confusing at the time as the market seems to enjoy confusing us.
In early 2008 we saw the “death cross” where the 50-day EMA moved below the 200-day EMA, and that was a great clue to us that things were about to get very dicey. You can see that the S&P 500 was sitting at approximately 1475 when that occurred, and if you recall, the S&P 500 eventually fell to 666 by the time we saw a bottom in the bear market in early 2009.
Now I’m not saying that is going to happen again, but I take these signs (death cross, and EMA’s) very seriously because no one is going to knock on my door to let me know that a bear market is coming, so I look to the past for clues to help me with the future in the market.
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
If I had an IFT left in July, I'd probably be trying to play for more short-term upside action. But eventually it will fail, imo. This summer, this fall?
