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| Today's Commentary (Short Term Outlook) |
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Nice rebound - but no
volume Stocks rallied yesterday, nearly regaining of Friday's losses. The Dow closed 143-points higher, while the TSP funds were mixed. The C-fund was up 1.31% on the day, the S-fund gained 1.82%, the I-fund was basically flat because of strength in the dollar, and the F-fund slipped 0.19%. The S&P 500 saw an inside day yesterday, meaning the high was lower than Friday's high, and the low was higher than Friday's low. That makes the action tough to interpret. The good news is, the S&P is back above the 20-day EMA and it is hard to be very bearish on stocks when the indexes are above the 20-day EMA, and the 20-day EMA is above the 50-day EMA. The bad news is that Friday's sell-off saw much higher volume (over 5 billion) than Monday's rebound (3.7 billion). That gives the bears something to chew on.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk More good news yesterday came from the Dow Transportation Index, one of the market leaders, which made a new 52-week closing high yesterday. Can the followers (S&P 500 and Dow) do it as well?  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Bond yields were quiet yesterday, the dollar was stronger, and gold, which usually struggles when the dollar is up, made a 5-month high yesterday showing good relative strength. Because of the low volume, I am a little skeptical of yesterday's rally and I will look at any upside follow-through today as a big positive, particularly if the S&P 500 can move above Friday's high of 1208. The rally was certainly more than just a dead-cat bounce after a sell-off so I am not totally dismissing it. We are starting to see resistance overhead and it could be a chore to move to new highs like the Transports, particularly with all of the events developing home and abroad. That will make a new high that much more impressive if it happens this week. Thanks for reading. We'll see you back here tomorrow. Tom Crowley |