Another flat top?

Another slow day on Wall Street although the Dow, which lost 11-points on the day, closed strongly avoiding steeper losses. 

        

The TSP stock funds all lost ground, as did the bond fund, but nothing series as the declines were between 0.03 and 0.35%.

The S&P 500 has been acting almost a little too predictably lately, that you almost have to wonder if is going to be as easy as it appears to be setting up.  As I mentioned yesterday, the recent rallies have stalled about 112 to 113 points above the 200-day EMA, and we saw that happen again this past Monday.  

We have also saw recent rallies stall forming several days of sideways action ("flat tops") before the pullback began, which seems to be what is happening right now.


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

Then there is the 10-day moving average of the NYSE ARMS Index, which has been telling us to be buyers at the 1.50 level, and to look for a pullback when it starts to hit about 0.80. 


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

So, are we getting any clues from other sectors and indices? 

The Dow Transportation Index has continued to lag the S&P 500 and the Dow, which is interesting considering it is consider the major market leader.  It has not broken out to a new high yet like the S&P and Dow, and has now formed a triple top.  Triple tops are less bearish than double tops as they tend to see a higher percentage of breakouts so we'll have to see if the Transports are strong enough to break through that 4050 area in the coming days.

                    

The small caps of the Russell 2000 made a double top in October like many of the other major indices, but it has been lagging badly as, not only is it well below the September / October highs, but the lower low it made is even more pronounced than that of the Transports above.  This looks like a new downtrend to me.

                    

The dollar has not been rebounding, but it has also been holding onto that 74.9 area, having only closed below it once. 

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

As we've talked about before, if the inverse correlation between the major stock indices and the dollar index continues, whether or not stocks pullback may be determined by whether or not the dollar holds here.

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