Still above
support
The stock market took a break yesterday, pulling back from the recent highs
as the dollar pushed higher again. The Dow lost 60-points on the day,
and the damage was spread around pretty equally among the indices.
For the TSP, the C-fund fell 0.77% on Tuesday, the S-fund
dropped 1.18%, and the I-fund gave up 0.80%, while the F-fund (bonds)
lost 0.40%.
The S&P 500
lost about 0.80% but remains above key support levels for now. Right
now, it's a healthy overbought pullback and
I would expect buyers to step in and buy this dip in the next couple of
days. But
if that's not the case and the two support levels and 20-day EMA, shown
below give way, then we may be in for a move to the 50-day EMA near 1162.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
A quick look at the market leaders shows support still holding. The
Nasdaq 100...
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
... and
despite some sharp losses in the Dow Transportation Index yesterday, it just
barely hung onto the support levels as well.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
One of the catalysts of yesterday's selling was a sharp rise in the dollar.
Here is a 5-day chart of the dollar and you can see that after hitting a low
last Thursday, the day the Dow was up 220-points, the dollar has risen 2.6%.
The fact that the S&P 500 is down just 0.07% since Thursday could be a sign
of strength for stocks, but a rising dollar will likely keep the pressure
on.
Here is the daily
chart of the dollar and while it remains entrenched in a strong downtrend,
it did move above a rising wedge and may be ready to test the 50-day EMA.
But when the 50-day EMA is below the 200-day EMA, the dollar is considered
to be in a bear market and when in a bear market, you would expect bearish
results. The technicals need to improve before we can say this is
looking bullish for the dollar.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
I have
been quite intrigued by the extreme bullishness we are seeing from the
"smart money". I have shown this put/call ratio of the OEX Index
several times, and each time I put it up, it shows the smart money getting
more and more bullish.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The 10-day
moving average is currently 0.67 and historically, a reading below 0.80 (in
number not direction on the chart) has been a great time to be a buyer.
Chart provided courtesy of www.sentimentrader.com
And of course what makes this so interesting is that the S&P 500 is up about
16% in the last two plus months. Normally, the smart money is most
bullish at a market bottom and they get increasingly less bullish / more
bearish as the market rises.
The numbers in that chart above are striking. There are few indicators
with that kind of record.
The TSP offices will be closed on Thursday for Veteran's Day, so they will
not be processing any transactions, or posting any share prices on that day.
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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