11/15/12
Stocks opened lower and barely saw any kind of a bounce all day, and the selling intensified into the close. The Dow lost 185-points and we could be closer to a capitulation.
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[TR]
[TD="width: 241"]
[/TD]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 165"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0036%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] -0.03%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -1.35%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -1.81%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -1.31%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
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If you are in stocks and they are falling sharply and you are anticipating a bottom, but you're not panicking yet, then we are probably not at the bottom. Capitulation is the act of an investor saying, "Get me out, now! At any price. Just get me out!" If you are in stocks and are not saying that yet, we may still have some downside left, but a 185-point decline after a few weeks of selling is usually a good indication that capitulation is getting close.
The level of fear is increasing, which is good, but the S&P 500 is actually just 8% off its recent highs. That's a good pullback, but it isn't even considered a correction yet (10%).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The bear flags are breaking down as they should, and yesterday's sharp sell-off sent the S&P through the lower end of the descending trading channel. That could be a sign of a bit of panic selling, although the VIX (fear gauge), while up almost 8% yesterday, is still relatively low considering the nasty market conditions.
The Russell 2000 is in correction territory (-11%). This recent breakdown is either panic, or the start of a rare crash.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
That's always the dilemma when dealing with a sharp sell-off. Should you buy it, or stand aside and wait, where you could miss a big rally? Most of the time corrections can be bought. But when you're wrong and the market does crash, your account can be severely hurt.
The Transportation Index has fallen back down toward the lower end of this long horizontal trading channel. It's going on 6-months and something is likely going to give soon. I've been saying that for a couple of months now so I don't know what that's worth.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The good is, consolidations tend to break up, but since it is so close to the bottom of the range, the immediate concern is a break down. And since this is the market leader... well, you get it.
We're seeing very oversold readings and that increases the likelihood of a snap-back rally - even if temporary.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
But with the indices all trading below their moving averages and support levels, we have to consider selling the rallies, even though the S&P 500 is not officially in a bear market yet (and not very close yet either.)
The holidays are coming up and they usually have a big impact on the market as volume tends to dry up, and sentiment gets a little more bullish. Here is the historical performance of the S&P 500 surrounding Thanksgiving Day.
Chart provided courtesy of www.sentimentrader.com
The day before and the day after Thanksgiving Day clearly have the most positive biases, and the Monday after Thanksgiving has the most negative bias.
Be careful out there.
Thanks for reading! We'll see you back here tomorrow.
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.
Stocks opened lower and barely saw any kind of a bounce all day, and the selling intensified into the close. The Dow lost 185-points and we could be closer to a capitulation.
[TABLE="width: 88%, align: center"]
[TR]
[TD="width: 241"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 165"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] 0.0036%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] -0.03%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -1.35%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -1.81%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -1.31%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 80%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
If you are in stocks and they are falling sharply and you are anticipating a bottom, but you're not panicking yet, then we are probably not at the bottom. Capitulation is the act of an investor saying, "Get me out, now! At any price. Just get me out!" If you are in stocks and are not saying that yet, we may still have some downside left, but a 185-point decline after a few weeks of selling is usually a good indication that capitulation is getting close.
The level of fear is increasing, which is good, but the S&P 500 is actually just 8% off its recent highs. That's a good pullback, but it isn't even considered a correction yet (10%).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The bear flags are breaking down as they should, and yesterday's sharp sell-off sent the S&P through the lower end of the descending trading channel. That could be a sign of a bit of panic selling, although the VIX (fear gauge), while up almost 8% yesterday, is still relatively low considering the nasty market conditions.
The Russell 2000 is in correction territory (-11%). This recent breakdown is either panic, or the start of a rare crash.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
That's always the dilemma when dealing with a sharp sell-off. Should you buy it, or stand aside and wait, where you could miss a big rally? Most of the time corrections can be bought. But when you're wrong and the market does crash, your account can be severely hurt.
The Transportation Index has fallen back down toward the lower end of this long horizontal trading channel. It's going on 6-months and something is likely going to give soon. I've been saying that for a couple of months now so I don't know what that's worth.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The good is, consolidations tend to break up, but since it is so close to the bottom of the range, the immediate concern is a break down. And since this is the market leader... well, you get it.
We're seeing very oversold readings and that increases the likelihood of a snap-back rally - even if temporary.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
But with the indices all trading below their moving averages and support levels, we have to consider selling the rallies, even though the S&P 500 is not officially in a bear market yet (and not very close yet either.)
The holidays are coming up and they usually have a big impact on the market as volume tends to dry up, and sentiment gets a little more bullish. Here is the historical performance of the S&P 500 surrounding Thanksgiving Day.
Chart provided courtesy of www.sentimentrader.com
The day before and the day after Thanksgiving Day clearly have the most positive biases, and the Monday after Thanksgiving has the most negative bias.
Be careful out there.
Thanks for reading! We'll see you back here tomorrow.
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.
