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| Today's Commentary (Short Term Outlook) |
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Euro rebounds but
investors remain tentative Stocks were down again yesterday, but the indexes closed well off of their lows after hitting support at the 200-day EMA. After being down 180-points in the morning, the Dow reversed course and closed down "just" 67-points with the help of a little rally in the euro. For the TSP, the C-fund lost 0.21%, the S-fund fell 1.12%, the I-fund slipped 0.03%, and the F-fund lost 0.04%. The S&P 500 slipped another 0.5% but saw an encouraging bounce off of the 200-day EMA. As we talked about yesterday, the market needed to make a move soon before the 200-day EMA and/or the 1070 low was taken out. So far it looks encouraging, but the technical damage has been severe and I'm afraid any bounce could be short-lived. The next test for the S&P 500 on the upside is the new declining resistance, but as you can see there is a lot of overhead resistance as it approaches 1150.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk All that said, it doesn't mean we won't see new highs at some point in the coming weeks. Remember, the market will do whatever it takes to get you to lean the wrong way. Playing a bounce is a possible strategy here, particularly if we test 1070, but you need to be nimble and remain cautious. The NYSE overbought/oversold indicator is close to, if not already done, making a double bottom; Something we have seen repeatedly before some sort of playable rally starts.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The euro actually climbed most of the day yesterday which is one reason why the bulls were able to take the Dow 120-points off its intraday low. You can see the strength in the euro Wednesday afternoon, but as I write this on Wednesday night, it is starting to pull back again. ![[Chart]](http://quotes.ino.com/chart/intraday.gif?s=CME_E7.M10.E&t=f&w=15&a=2&v=w)
(The above chart of the euro is live and will change during the day as the euro changes.) The euro has come down hard in the last several weeks and like stocks, could be due for a bounce. But the trend here is down and it will continue to put pressure on U.S. stocks. Tomorrow is the 14th trading day in May and you can see below that things get a little more dicey historically after the third week of the month. The futures have also turn very negative. Thanks for reading. We'll see you tomorrow. Tom Crowley |