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Peak or breakout II?
Stocks were mixed
yesterday as the Dow closed down 18-points, the S&P 500 was flat, and
small caps did very well. The TSP stock funds were all up;
C-fund +0.05, the S-fund +0.77%, and the I-fund +0.27%. The bond
fund (F-fund) lost 0.14%.
I called this article "peak or breakout II" because we have the same
situation as yesterday.
The S&P 500 looks like it might want to rollover, but it is also
poised to breakout if things go its way. It actually did make a
new intraday high at 1115 .58 yesterday, but drifted lower to close at 1109.24.
A breakout to new highs may find resistance at the longer-term rising trendline.
Chart provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
The PMO indicator, which has been bouncing between buy and
sell signals lately, is back on a buy signal.
The 10-day moving average of the NYSE ARMS Index is now down to 1.47.
That's close enough to that 1.50 buy signal for government work (no offense),
which has worked well in 2009.
Chart provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
The chart of the Wilshire 4500, which is basically our S-fund (although
officially the S-fund now tracks the
Dow Jones U.S. Completion Total),
has been consolidating for three months, which has formed a pattern that
looks awfully similar to a pattern we saw in late spring / early summer.
Chart provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
That one worked out real well for the small caps. Does the
bull market have enough strength to make another run like that?
In theory, the market could hold up in December, then experience some
selling January, simply based on the fact that many investors may have
some nice gain in 2009, but if they sell their winning positions in
December, they will have to pay taxes on the gains on their 2009 tax
return. On the other hand if the hold onto those positions into
January, they won't have to report the gain until they file their 2010
tax return.
I have no facts or data to back that up, but it makes sense and is a
theory that has been tossed around for years.
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Tom Crowley
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