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Market Comments June 14, 2011 Current TSP Share Prices Twitter

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Will 200-day EMA hold? Stocks opened up higher on Monday morning, then we saw a "V" like mid-day bottom and strong rally before a decline into the close.  When all was said and done the Dow gained 1-point on the day.                                  For the TSP, the C-fund added 0.10% yesterday, the S-fund lost 0.37%, the I-fund gained 0.08%, and the F-fund (bonds) slipped 0.07%.  All eyes are on the important 200-day EMA.  In a bull market, pullbacks and corrections "should" find support at this level so our current market will be getting a test this week.  The 200-day EMA is currently sitting at about 1263, and Monday's low was 1,265.64 . The 200-day simple moving average, used by some traders and investors but not shown here, is currently near 1255.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk All of our market leaders are also testing the 200-day EMA...                                                    Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk                                                                              Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk                                                                             Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk So the charts have deteriorated and are looking for some support at the 200-day EMA after precipitous decline in June, and the May 2 high.  Not surprising the indices are oversold, and sentiment is overly bearish - both indications of a potential relief rally, although I have been saying that for a couple of weeks now. Let's take a look at the put / call ratios.  The 10-day moving averages of the "dumb money" put / call ratios (CBOE and Equity p/c ratios) are hitting bearish levels not seen in a year, and in the case of the Equity ratio, over two years.                                                               Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The "smart money" of the OEX put / call ratio is still down in the bearish zone, but well off of the lows, and at a level that we saw near the March lows earlier this year. I still think we could see a rally back up to the 50-day EMA (currently 1316, but falling), and that rally may have to be sold, or at least reevaluated as the chances of that rally failing at or near the 50-day EMA are growing.  But even if the market declines or moves sideways for most of the summer, we will certainly see at least short-term rallies, and we are getting way overdue for  one. The summer months are just so tough on the market.  We have seen weakness during the summer months going back several years and it is possible that any sustained rally will hold off until after Labor Day weekend. Of course the market loves to keep us on our toes so a strong rally wouldn't surprise me, but I am making plans to be a seller of any rallies until the technical picture improves.  Thanks for reading!  We'll see you back here tomorrow..   Click here to discuss today's Market Commentary Tom Crowley

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