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Taper or no taper?
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The Dow gained 138-points keeping the triple digit moves coming.
The gain was broad but volume was light in front of today's Fed press
conference.
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Daily TSP Funds Return
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G-Fund: |
+0.0050% |
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F-fund: |
-0.01% |
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C-fund: |
+0.78% |
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S-fund: |
+0.94% |
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I-fund: |
+0.46% |
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The S&P 500 is holding above the
descending resistance line (red), but there is a small rising wedge (blue) that could
cause problems. You can see how volume has been drying up as the index
rallied off its recent low.
Chart
provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
I could go over some indicators or talk about the breakout as a
positive - and the chart does look pretty good, but my attention right now is still on the 1987 comparison. If we can
get by this without any damage I will have likely missed out out on some
decent gains and we'll go from there, but the volatility is high and I am taking note that
something may be brewing and I'm playing it safe - just in case.
Here's the current intermediate-term chart. Looks nice...
Chart
provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
And here is the 1987 chart in
about the same area...
Chart
provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
And of course here is what
happened shortly afterward in 1987...
Chart
provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
Of course there are many
differences in the current conditions, but it's the chart formation I am
watching. We have a debt bubble today that many expect to burst, but
whether that happens this week or in a couple of years, no one really knows.
If this current comparison is trying to tell us something, why not be ready
for it? The doomsday December 21, 2012 believers may have been
embarrassed when the world didn't end, but they were alive and probably have a nice stash
of food for emergencies now. No harm, no foul.
The FOMC meeting started yesterday and today at 2:30 PM, I believe, Ben Bernanke's press conference
begins. If he mentions the word "taper"
(in the context of QE) you may see some panic ensue.
Investors are so worried about this that if they hear the word "paper", or
any word that rhymes with taper, there may be some selling first, ask
questions later reaction. Ben should measure his words carefully,
but we are set up for a
sell-the-news reaction, despite the nice set up in many charts.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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