Today's Commentary
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Nervousness but bulls hold ground
A disappointing earnings report from Cisco on Wednesday evening caused some
overnight selling that carried into Thursday morning. But once again
the dip buyers showed up and the 80-point morning decline turned into an
11-point loss by the close.
For the TSP, the C-fund
added 0.08% yesterday, the S-fund
gained 0.44%, the I-fund lost 0.86%, and the F-fund (bonds)
fell 0.30%.
The S&P 500 closed up slightly but basically is in a two-day
consolidation from the Tuesday high. The index is obviously extended
with it trading 136-points above the 200-day EMA, but I am not watching the
indicators very closely right now. It's the charts, the trend, and
secondly sentiment that seems to be working and calling the shots right now.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
One of the concerns
that I have had recently was that the market leader Dow Transportation
Index, was lagging badly. But after a 3-week correction and
consolidation, it decided to break to the upside of the recent pennant
formation. That's a very nice sign for the bulls.
Charts provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
One of our message board members (JTH) pointed out the diamond formation on
the Transports chart (in blue) and I read statistics that diamonds break to
the upside 69% of the time. Bingo! I was a little concerned
about this one but this is now a bullish situation.
Two weeks ago today (Friday) we saw a sell-off on the news out of Eqypt.
The unrest continues and may escalate in the coming days. Prior to
that one-day sell off the Dow put in a multi-day flat top. Flat tops
tend to lead to drops.
Charts provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
We have now seen a 3-day flat top in the Dow. Will we see a repeat
drop this Friday? If so, will the flat top, market drop, give us
another rebound market pop for next week? With all the uncertainty in
Egypt, we could see investors pull some money off of the table before the
weekend.
The TSP Talk Sentiment Survey came in at
44% bullish, 42% bearish for a
bulls to bears ratio of 1.05 to 1. That is another
buy signal (anything 1.25 to 1 or lower is a buy in a bull market).
So, the Sentiment Survey System's allocation will remain 100% S-Fund for
next week.
Thanks for reading! Have a great weekend!
Tom Crowley
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