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Today's Commentary
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The dollar and prices
Stocks opened lower yesterday, and while the indices were able to rally off
of the morning lows, for the most part they stayed below the break even mark
all day. The Dow and S&P 500 were down modestly, while the market
leaders - Nasdaq and Dow Transportation Index - close slightly higher.
For the TSP, the C-fund lost 0.20% on Monday, the S-fund
added 0.07%, and the I-fund
dropped 0.41% after another move higher in the dollar. The F-fund (bonds)
was down 0.07%.
The S&P 500
hung in there pretty well despite the fact that everyone has been expecting a
pullback. As we've been watching, the market leaders, Nasdaq and Dow
Transportation, have already broken above their April highs and have been
able to hold above that level. If the S&P bucks that trend and falls
below that April high near 1220, then the next likely pullback target would be 1196.
That is where the current trend line meets the prior October peak. Since the
trend line is moving up sharply, that downside target should be higher
tomorrow, and every day after until it gets broken.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
We have been talking about the U.S. dollar's weakness and we have seen it
helping stocks rally, and recently helped push gold up over $1400 an once,
but it is also pushing other commodity prices higher, including oil and gas.
Have you seen what has been going on with the price of oil lately? It
has also moved above its April high, and if that breakout holds, there is no
real resistance until it gets above $100.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The
longer-term chart shows just how much room there could be on the upside if
resistance is taken out. That's one of the cons of a falling dollar.
Everything it buys goes up in price, so this winter could be tough for those
who are already hurting financially.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
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