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| Today's Commentary (Short Term Outlook) |
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Wedges breaking Although the Dow closed up 14-points, stocks closed mostly lower on the day as all three TSP stock funds were down, and investors seemed to favor bonds as the F-fund gained 0.36%. I may be getting a little too precise here, but I am seeing the market leaders just starting to break below their rising support, so it leads me to believe that the S&P 500 will be next.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The breaks are not blatant yet and I would like to see the indices stay beneath the support for 3 to 5 days before calling it a break in trend. This is day two for the Dow Transports...  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk ...but only day one for the Nasdaq - and it still remains above the 50-day EMA...  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk One index we check on once in a while, and should probably be considered more of a market leader in this environment since it was a big catalyst in the recent financial crisis, is the Housing Index. Although it has not actually broken its longer-term rising trend off of the March low, it has already put in a lower low and a potential lower high if moves below the October 1 low.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The chart has formed an obvious head & shoulders pattern (H&S), which is bearish, and a break below the neckline would give it a downside target of somewhere around 79-85, which would pull it below the long-term rising support line. Yesterday we talked about the dollar's recent rally causing stocks to pull back, and here is the dollar closing for a second day above the rising resistance...  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Although it is only day two, the descending wedge was bound to break sooner rather than later and odds were that it would break to the upside, and as we have said many times, a break to the upside of the dollar's rising wedge would likely coincide with a break to the downside in the S&P 500's rising wedge. That hasn't happened quite yet, but if follows the leaders, the Transports and the Nasdaq, it is just a matter of time. That's all for today. Thanks for reading. We'll see you back here tomorrow! |