11/09/12
Stocks dropped sharply again yesterday making the 2-day post-election sell-off stand at about a 3.5% loss for the S&P 500. The Dow lost 121-points on the day.
[TABLE="width: 88%, align: center"]
[TR]
[TD="width: 241"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 156"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0043%[/TD]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] 0.12%[/TD]
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[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -1.22%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -1.32%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.63%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
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The S&P 500 has pullback to the 200 day moving averages. The 200-day EMA (exponential moving average) sits near 1375, just about where the bear flag initial downside target would be. That is, the distance from the top of the flag pole to the bottom of the flag pole vs. the distance from the top of the flag itself.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The 200-day SMA (simple moving average) has been broken. Leave it to sentimenTrader.com to tell us what happens after the 200-day SMA is broken for the first time in at least 100 days, after hitting a 3-year high within the last 3 months...
Chart provided courtesy of www.sentimentrader.com
Excluding the 1987 market crash, this has been a pretty good time to be a buyer, especially if you are looking out 1 to 3 months. Add to that the fact that November, December, and January are three of the strongest months of the year historically, and I like the odds. There is just one small problem out there... A fiscal cliff that needs to be resolved.
And if this weekly chart is any kind of indication of how the fiscal cliff situation will play out, we may have a problem. The weekly chart of the S&P 500 shows a rising wedge, generally a bearish formation, may have been broken. If the S&P 500 cannot crawl back into the wedge over the next week or so, this could be a problem for the longer-term.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
On a day where the S&P 500 lost more than -1% and set a multi-month low, it's very unusual to see the VIX "fear gauge" also decline by more than -1%.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It has only happened three other times, 3/27/92, 12/19/00 and 9/21/01. Short-term performance going forward was mixed, but the next 3-4 weeks saw stocks rally each time.
The TSP Talk Sentiment Survey came in at 37% bulls, 53% bears, for a bulls to bears ratio of 0.70 to 1. That is a buy signal which means the system will move to a 100% S fund allocation for the week of 11/12/12 - 11/16/12.
So we have some short-term positives but we may have some longer-term issues.
Per www.tsp.gov: Some financial markets will be closed on Monday, November 12th in observance of the Veterans Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (November 12th) will be processed Tuesday night (November 13th), at Tuesday's closing share prices.
Thanks for reading! Have a great weekend and Happy Veteran's Day! Thanks to all our veterans for their service!
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
