Pulling back but no
official harm done yet
After two failed breakout attempts to the upside, yesterday we saw a
new attempt to break below recent support. So far the damage has
been contained as the S&P 500 remained above the 50-day moving average
and the bullish trend line. What happens next may set the tone for
the next market move.
Once again my short term "play" backfired on me as my interfund transfer
Friday to 35% S fund, which preceded a nice intraday rally, came back to
bite me in Monday's afternoon sell off.
The market was relatively flat early flip flopping between positive and
negative territory and you could sense something was going to happen,
but we didn't know what and we couldn't do anything about it since the
break down occurred after the deadline. Eventually the pressure of
rising bond yields took its toll on stocks.
Now the S&P has pulled back to a support area and the next short term
move could be very important to the intermediate term. Will it
remain within the rising wedge formation?
Chart provided courtesy of
www.decisionpoint.com
Last
week I said:
"If
the market does drop again today, but stays above some key support areas
(looks like 1270 to 1275 would be a nice stopping place), it may be time
to plant some seeds again."
Yesterday's low was 1275.67 and that short term bullish support trend
line is still rising. It could either be a good buying opportunity
or the end of the road for the intermediate term bull.
You can see below that we are now as oversold as any point since this
rally began in late October.
Chart provided courtesy of
www.decisionpoint.com
Again, this
could be a great short term buying opportunity or we could be losing
this rally. Tough call but a move below 1275 or 1270 may give us
the answer.
The I fund dodged a bullet yesterday being up modestly despite the late
U.S. market weakness AND a stronger dollar, but it may pay the price
today as the European and Asian markets could react to that U.S.
weakness today. That is unless the Dow really rebounds nicely
today and / or we see a big drop in the the dollar.
My guess (take that
for what it is worth) is that any rally to the 1285 area, the short term
support area that was broken yesterday, may be a good selling point.
But I have been wrong many times underestimating the strength of this
market and missing many good short term buying opportunities. One
day it will be the correct call but I can't guarantee that will be this
time.
I mentioned complacency yesterday and there are many TSP participants
who have sat on the S and / or I funds making good money for several
months now in spite of many of the issues I have been bringing up.
This leads me to believe that if we do see a serious sell off that they
wait longer than most to move aside. Their patience has been the
reason for their success and it could eventually be their down fall if
they wait too long. Again I'm talking like the glass is half empty
but I remain in capital preservation mode until my longer term
indicators improve.
That’s all for today. Currently 65% G, 35% S fund. Thanks for reading.
See you tomorrow.
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