The trend matters
                         
Stocks rallied yesterday, recovering the losses from Wednesday.  The Dow gained 42-points and closed at its highest level since 2008. 
                                  
For the TSP, the C-fund was up 0.62% yesterday, the S-fund gained 1.01%, the I-fund added 0.79%, and the F-fund (bonds) made 0.13%.

I am trying to be disciplined while the rising trend continues, so I have been riding this rally out but I get the feeling that days like yesterday are setting us up for something.  Just when you see the indices starting to rollover a little, and the indicators stretching to the point of looking like a top, we get a day like yesterday that says, "Hey, where do you think you are going?  We have more upside to go." 

One day the trap door will open, but who knows when that will be?  I still have my eye on the 1275 area as a possible upside  target, but what I want to happen, and what actually happens, doesn't usually work out exactly.

The S&P 500 is making a bit of a bull flag pattern off of the recent highs and I think it will be important for the index to move above Thursday's high at some point during the day today, otherwise it will be just another lower high / lower low that could take us down to the 1228 area near the November highs.
                      
                       Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The dollar moved slightly lower yesterday after Wednesday big rally, and as I write this on Thursday night, the overnight trading has it down to 79.78 (-0.5%) from the 80.03 4 PM ET close.

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

The battle seems to be between the 200-day EMA, which is acting as resistance, and the 50-day EMA, which has been decent support so far.
                                
I am not going to show the bad news data and charts again today.  We all know how extended many of them are.  Just take a look at any other commentary from this week if you want to see them.  Right now my eyes are on the trading channels in the S&P chart.  Not the put/call ratios.  Not the Confidence Indicators.  Not the recent Hindenburg Omen signal.  Just the chart of the S&P 500.

The TSP Talk Sentiment Survey System came in at 56% bulls, 32% bears for a 1.75 bulls to bears ratio.  That is a neutral reading so the system will hold onto its 100% S-fund allocation for another week.  The System is up 32.9% for the year, and is still hanging onto the #2 spot on our AutoTracker.

Thanks for reading!  Have a great weekend!

Tom Crowley