Market Comments June 11, 2009  Current TSP Share Prices

Today's Comments (Short Term Outlook)

Bullish formations, and yields Stocks slipped yesterday but closed well off their lows as the C and S funds fell modestly, while the I-fund actually rallied 0.70%.  Bonds gave back some of Tuesday's gains. The S&P 500 continues to consolidate and while the bears might be saying that the index seems to be floundering for the last several weeks, the bulls look at this action as healthy consolidation.                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk We are seeing a lot of cup and handle formations forming on many charts.  The C&H is a consolidation formation that has a tenancy to break to the upside.  You'd like to see the handles portion, the smaller dip on the right, be a little larger than what we're seeing, but this is a positive for stocks.  The question is will we see a breakout that will hold? The chart of the financial sector is looking a lot like that of the S&P 500; It hasn't moved above the 200-day EMA and the cup and handle is forming nicely.                 Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The banking sector looks similar, although there was a temporary spike above the 200-day moving average in May.  We saw a spike like that last September also, before things went south again, but the current consolidation looks a lot less volatile than last fall's.                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The Housing chart has a cup and handle as well, but it is not quite as clean as the others and, if you notice, it has formed a double bottom similar to the one on the Nasdaq chart that we looked at yesterday.  This is a good sign, but it needs to get back over that 200-day moving average.                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The bulls are hoping that the temporary move above the 200-day moving average that the housing index saw in April / May, ends up better than it did back in September.  Taking a look at bond yields, the stock market has had a tendency to move lower when the yields move up sharply, but that has not been the case during the current rally in stocks.           . This tells me that we very likely could see either a move down in yields (rally in bonds / F-fund) or a drop in stocks, or both.  That's all for today.  Thanks for reading!  See you tomorrow!