TSP Talk

Market Comments

TSP Tracker

Premiums

Site Map

TSP Funds

Message Board

Returns

Market Comments May 27, 2011 Current TSP Share Prices Twitter

Today's Commentary

Holiday Trading Thursday's action was very similar to Wednesday's in that stocks opened lower, rallied most of the day, but saw selling into the close.  The Dow gained 8-points on the day, but the broader indices fared much better.                                  For the TSP, the C-fund was up 0.42% yesterday, the S-fund gained 1.01%, the I-fund added 0.72%, and the F-fund (bonds) was also up, +0.30%.  The S&P 500 is holding above support during these lighter than average trading days leading up to a long holiday weekend.  The chart looks like it could go either way being that it is at support, but also in a downtrend, but I would not put too much emphasis on today's action because of the holiday.                                                   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk If we crash through support today, we could easily see a move right back above it on Tuesday, and if we rally back above the 50-day EMA today, we could see a break of support on Tuesday.  That's the nature of pre/post holiday trading.  We may be better off looking away today. The small caps of the Russell 2000 index are in a new downtrend like the other indices, and while the index was able to get back above the 50-day EMA, yesterday's sharp rallied stalled right at the 20-day EMA.  The 20-day EMA is generally less of an obstacle than the 50-day EMA, but next week (not so much today) will be a big test for the small cap index as it will likely test the 20-day EMA and the new descending resistance line.                                                   Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk We haven't talked about bonds for a while and they have actually performed pretty well while stocks have been pulling back.  The F-fund is up 1.23% so far this month while all three stock funds are down. As we know, bond yields move inversely to bond prices and the F-fund so they have been falling while the F-fund has rallied.  We have a pretty clear head and shoulders pattern on the 10-Year T-Note yield chart and if the neckline breaks, we have a projected downside target of 25. which is 2.5%.  That would be very strange for an environment concerned with inflation.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Here is a longer-term view of the yield.  The weekly chart shows where the long-term support would be, and not coincidentally, it is currently near 2.5%.  The PMO indicator is also in a long-term sell signal.                           Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk That is bullish for bonds and the F-fund, but also keep in mind that those head and shoulders patterns can sometimes find support at the neckline, and then move back up to test the middle of the head.  That would be near 3.6% and of course the F-fund would pull back if that happens.  So we will want to watch the neckline closely to see if it breaks or not. Of course a rally in the bond market would lead us to believe that perhaps stocks won't rally, so this one goes in the concern column for the stock market - unless we see that test of the head. Our TSP Talk Sentiment Survey came in at 45% bulls, 39% bears, for a 1.15 ratio. That is a neutral reading so the system's allocation remains 100% S-Fund for next week. The system is currently up 8.57% in 2011, through Thursday's close. Thanks for reading!  Have a great Memorial Day Weekend!     Click here to discuss today's Market Commentary Tom Crowley

TSP Talk does not guarantee the accuracy or completeness of this report, nor does TSPtalk.com assume any liability for any loss that may result from reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are for general information only.  The information contained on this website is for educational purposes only and not intended to be recommendations, and may not be published, broadcast, rewritten or otherwise distributed without prior written consent from TSPtalk.com.