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Buy the dips, or sell the rallies? Stocks saw more sharp losses on Tuesday morning, but just before noon ET, the indices bottomed and rallied into the close.  Hewlett-Packard was responsible for much of the Dow's 69-point loss, but that was well off of the day's low of -170-points. The Nasdaq actually closed in positive territory while the S&P 500 finished flat.  Once again the S&P inversely tracked the action in the U.S. dollar on the day.              Here is the dollar's intraday chart with the market open hours of 9:30 AM to 4:00 PM between the blue dashed lines.  Another near mirror image.                    For the TSP, the C-fund was flat at -0.01% yesterday, the S-fund lost 0.43%, the I-fund fell 1.14%, and the F-fund (bonds) added 0.14%.  The S&P 500 put in a nice reversal day yesterday, but not before convincingly breaking below another support level - the intermediate-term support line of the rising trading channel.  The concern now is whether that support line will now act as resistance.  It is only day one (maybe two) below that support so its not quite at the 3 to 5 day period I like to see before accepting the end of a trend.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The afternoon rally allowed the S&P 500 to just barely close above 50-day EMA again.  We also saw the open gap get penetrated, but not filled.  That may or may not be enough to call a fill because it was basically a test that passed, but it is still open.  I have been saying "near 1315" but the open gap was actually closer to being between 1313 and 1319, and the S&P fell down to 1318 on the day. The put/call ratios are telling us two possibly opposing stories.  The dumb money of the Equity put/call ratio is down at a level that has resulted in some prior market bottoms over the last year or so.  As we know, we use the dumb money as a contrarian indicator so the fact that they are getting as bearish as they have been in over a year, we might expect a bottom here as well and it could be bullish for stocks in the short-term.                           Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk On the other hand the smart money of the OEX put/call ratio is also quite bearish.  We don't use the smart money as a contrarian indicator so this is an actual bearish sign for stocks. Turn-around Tuesday lived up to its reputation but the bulls really need to see some positive follow-through action in the next day or two before calling for a bottom.  The question is, should we buy the dips, or sell the rips (rallies)?  We will need to see how the S&P 500 reacts to its new overhead resistance, which were the old support levels. Thanks for reading!  We'll see you back here tomorrow.   Click here to discuss today's Market Commentary Tom Crowley

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