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Special Notice for April 10: Because some of the stock and bond
markets will be closed Friday, April 10, we will not be updating
share prices in any of the TSP funds for that day. Consequently,
transactions will not be processed until the following business day
(that is Monday, April 13).
Light volume selling
Stocks
pulled back again yesterday as the major indices dropped 2% to 3% and the
wild volatility continued. Volume was very light and that is either a
result of a shortened holiday week where traders back off a little, or
because there isn't as much conviction to the downside right now.
As noted above, Friday is a holiday for the stock market and many times
trading can be a little "off" during short weeks. In other words, we
may not want to take this week's action too seriously... yet. So,
regardless of what happens today and tomorrow, if the selling continues next
week, that won't be good for the bulls.
The S&P 500 continues to take a little breather after its huge run up
last month. This kind of consolidation is healthy during a bull
market, but I still find it concerning that it has not been able to move
above the resistance of the declining trendline. Perhaps it is just
taking some time to refuel, but of course another option is that it is just
going to stay in the downtrend. They say the trend is your friend, and
the longer-term trend remains bearish.
Chart
provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
Another look at the market leaders, the Nasdaq and the Dow Transports, shows
that the Nasdaq is looking a little better than the S&P 500, but seems to
have a problem with the 1600 level. The recent pullback has nearly
filled the gap it created last week, but there is support and resistance
very close at hand and it appears that it can go either way.
Chart
provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
The Dow Transports are still lagging, which is not a good position for a
market leader to be in. It never did reach the upper end of the
declining trend line like the Nasdaq and S&P have, and it is now backing off
after temporarily breaking above resistance (which was the old support).
It is trading above the 20 and 50-day moving averages, but now just barely.
Chart
provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
Taking a look at the Rydex Cash
Flow Ratio shows us that "the herd", or dumb money, is still dumping money
into the bullish funds at a very high pace, which is a contrarian indicator.
The market does like to climb a wall of worry, but like the put/call ratios,
this is a sign of complacency and we know the market will eat up those who
are not worried about their position.
Chart
provided courtesy of
www.decisionpoint.com,
analysis by TSP Talk
With the holiday on Friday, I will post this week's sentiment survey a
little early so we can have a buy / sell signal for Thursday morning.
Look for it some time today.
I am not a big fan of seasonality during this volatile market environment,
but here is the Good Friday historical data. Today is day -2, Thursday
will be day -1, and Monday is +1.
That's all I have for today.
Thanks for reading. We'll see you back here tomorrow!
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