Another bull market signal, but the work is not done yet
Stocks rallied sharply last Monday and moved mostly sideways for the rest of the week. The S&P 500 is now facing strong resistance on the chart, but will the new bull market signal be enough to push it through?
For the week, all of the TSP funds closed in positive territory. The C-fund was up 1.5%, the S-fund led the way gaining 2.16%, and the I-fund was up 1.61%. Bonds (F-fund) picked up 0.24% and the G-fund added 0.04%.
The September strength continued for the stock funds and the gains are impressive. For the month, the C-fund is now up 7.38%, the S-fund has a gain of 7.96%, and the I-fund has added 6.90%. Bonds and the F-fund are down 0.61% in September, and the G-fund is up 0.10%.
This week we are focusing on the S&P 500 testing the top of its recent summer trading range between 1040 and 1130, and the 50-day EMA (exponential moving average) crossing back above the 200-day EMA. This “golden cross” is a signal that we are entering a new bull market, but this indicator has lost a little of its luster because this is the 4th crossover since early July for these EMA’s – something that normally does not happen very often.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This type of crossover is typically a strong long-term signal, but in the short-term it can actually be more of a sign of being overbought or oversold – depending on the direction of the crossover - in this case overbought.
Trend traders may be looking at Friday’s intraday move above the August highs as a buy signal so while we are at the resistance “area”, it did officially make a higher high even though it has not moved above the June high yet. We shall see how they react this week. Perhaps the fact that the S&P 500 did not close above the June or August highs may discourage them from jumping on board just yet. If however, the S&P takes out the 1135 level, I suspect the momentum could continue higher.
If you are into the “buy low sell high” theory of trading, this could be the high area and perhaps expecting a pullback is prudent. But I never want to underestimate the power of momentum so while I would expect a pullback, I won’t be surprised if the bulls can keep things moving north. The strength has been relentless but looking at the chart above, you can see that this market has had a habit of turning on a dime since the April peak, so it will be interesting to see what happens here at the resistance area.
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
Stocks rallied sharply last Monday and moved mostly sideways for the rest of the week. The S&P 500 is now facing strong resistance on the chart, but will the new bull market signal be enough to push it through?
For the week, all of the TSP funds closed in positive territory. The C-fund was up 1.5%, the S-fund led the way gaining 2.16%, and the I-fund was up 1.61%. Bonds (F-fund) picked up 0.24% and the G-fund added 0.04%.
The September strength continued for the stock funds and the gains are impressive. For the month, the C-fund is now up 7.38%, the S-fund has a gain of 7.96%, and the I-fund has added 6.90%. Bonds and the F-fund are down 0.61% in September, and the G-fund is up 0.10%.
This week we are focusing on the S&P 500 testing the top of its recent summer trading range between 1040 and 1130, and the 50-day EMA (exponential moving average) crossing back above the 200-day EMA. This “golden cross” is a signal that we are entering a new bull market, but this indicator has lost a little of its luster because this is the 4th crossover since early July for these EMA’s – something that normally does not happen very often.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This type of crossover is typically a strong long-term signal, but in the short-term it can actually be more of a sign of being overbought or oversold – depending on the direction of the crossover - in this case overbought.
Trend traders may be looking at Friday’s intraday move above the August highs as a buy signal so while we are at the resistance “area”, it did officially make a higher high even though it has not moved above the June high yet. We shall see how they react this week. Perhaps the fact that the S&P 500 did not close above the June or August highs may discourage them from jumping on board just yet. If however, the S&P takes out the 1135 level, I suspect the momentum could continue higher.
If you are into the “buy low sell high” theory of trading, this could be the high area and perhaps expecting a pullback is prudent. But I never want to underestimate the power of momentum so while I would expect a pullback, I won’t be surprised if the bulls can keep things moving north. The strength has been relentless but looking at the chart above, you can see that this market has had a habit of turning on a dime since the April peak, so it will be interesting to see what happens here at the resistance area.
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
