Will March come in like a lion, or a lamb?

3/01/12

Stocks opened higher yesterday after a couple strong economic reports, but retreated after Ben Bernanke told Congress that unless growth accelerated, the unacceptably high U.S. unemployment rate would not keep dropping. The Dow fell 53-points on the day.

For the TSP, the C-fund was down 0.46% yesterday, the S-fund lost 0.94%, the I-fund fell 0.76%, and the F-fund (bonds) slipped 0.01%.

The loss in the S&P 500 dipped the index back below the 2011 high, and it is once again testing the bottom of the ascending trading channel. Again, this is why I like to see 3 or more closes above a breakout before accepting it. Many times we see false breakout. Whether that's what we'll have this time, I don't know, but we're back to no breakout as of right now.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Taking a closer look at the recent action and we see that we have had 2 "outside days" this week. An outside day occurs when the day's high is higher then the prior day's high, and the low is lower than the prior day's low. The problem with this is that outside days tend to occur near market reversals. I am not expecting a "top" here, but I would certainly welcome some kind of pullback, preferable to the 50-day EMA, so we can have a better buying opportunity.

[TD="width: 291"][/TD]

March is historically quite strong during the first few days of the month, but can that hold this year after 2 very strong months? You can see that the first half of the month has a more positive bias than the second half.

Chart provided courtesy of www.sentimentrader.com

Overall, March is one of the stronger months of the year historically, averaging a gain of 1% (5th best month) going back to 1950, and being positive over 60% of the time (4th best month).

Chart provided courtesy of www.sentimentrader.com

Administrative Note: Beginning today, RevShark is offering 2 weeks of free access to his TSP Timing Newsletter and Daily Afternoon Commentary. Please click here for more information.

Thanks for reading! We'll see you back here tomorrow.

Tom Crowley


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[u.s.dan]

Looking for another 5% gain this month. But not by staying put in any one fund. It will require the use of one or both IFT's. Thanks for your commentaries Tom.