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Today's Commentary           Not seeing a current commentary?

My, how one day can change things Standard & Poor's cut its outlook on US government debt to negative from stable on Monday morning, and that sent stocks reeling at the open.  The bad news is, the Dow lost 140-points.  The good news is, it closed 108-points off its intraday low.                                   For the TSP, the C-fund lost 1.10% yesterday, the S-fund gave up 1.48%, the I-fund dropped 2.00%, and the F-fund (bonds) gained 0.19%. It was quite a shake up on Monday after I sang the praises of the strong chart formations.  We did have small bear flags on the charts and they broke down, but the more intermediate-term formations were, and possibly still are, positive.  But the S&P 500 must climb back above the 50-day EMA very quickly or that will be the end of that. The head and shoulders pattern is still working and you will notice that the right shoulder found support almost exactly at the left shoulder low made in February.                                                   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk That February low was tested on many major indices yesterday.  Here is the NYSE Composite Index...                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk And here is the Nasdaq...                                                   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The main trouble for the S&P 500 and the Nasdaq right now is that they are trading below the 50-day EMA and that is a big warning sign for us.  I like to give it 3 to 5 days to reclaim the EMA but with this being the 2nd break of the 50-day EMA in just over a month, we have to proceed with caution. By the way, it took 5 days for the S&P 500 to retake the breakdown of the 50-day EMA in March. The small caps of the Russell 2000 (not shown) and the Dow Transportation Index found support at the 50-day EMA before rebounding.                                                      Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk If you recall, the smart money OEX put/call ratio traders have been very bearish lately and the last few times they took the 10-day moving average of the put/call ratio below the 2.0 line, we saw selling kick in.                                         Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk It is still below the 2.0 line so I suppose we should not get our hopes too high for much of a bounce here.  Remember, since 1990, the 2.0 level had only been hit two other times before this year's moves in March and April.  Those were in 2000 and 2007, which were just a few months before major market tops.    So, perhaps we are forming a double top here.  That does not mean we have to sell today, but it does tell us that we should be ready to bail if the charts give us the signal - and we are getting close.  Keep your eye on that 50-day EMA on the S&P 500. I don't see anything posted yet on the TSP.gov website but Friday is a market holiday and I am assuming that the TSP will be closed.  It was closed on Good Friday in 2010.  That also means I will be posting our Sentiment Survey a day earlier this week. Thanks for reading!  We'll see you back here tomorrow.   Click here to discuss today's Market Commentary Tom Crowley

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