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| Today's Commentary (Short Term Outlook) |
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Progress Stocks open higher yesterday and were able to hold onto, and add to, those gains into the close. The Dow was up 213-points as it, and the S&P 500, were able to close back above their 200-day EMA's. For the TSP, the C-fund gained 2.35%, the S-fund rallied 2.51%, and the I fund jumped 2.67%, while the F-fund slipped 0.09%. The S&P 500 closed above the 200-day EMA and has now made a three week high, potentially starting a new short-term uptrend. The 50-day EMA will be the next test and many times that resistance will be enough to hold it back for at least a day or so. If we are actually going to be starting a new bear market, the 50-day EMA will be even more trouble than that so it will be interesting to see how the S&P 500 reacts over the next several days.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk I have shown the 2007 chart of the S&P 500 many times this year as today's S&P chart has been following along pretty closely. I marked the above chart A thru F to show the comparison, and we appear to still be in that circled area, which eventually broke to the upside in 2007.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk It is important to note that the peak marked "G" was the 2007 market peak before the bear market began. So while we could see a move to the 1050 area (see the head & shoulders chart from Monday), we could also potentially see a move over the recent April high, even if this does turn out to be the end of the 2009-2010 bull market. We've talked about the dollar being due for a pullback, and if that happened, it could benefit the stock market. So far it has played out, but there is support near 85.5 and 83.0. The 83.0 support is a longer-term trend and the earlier connecting lows are not shown.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk We have a good news, bad news situation with the NYSE overbought/oversold indicator. The good news is that the indicator has clearly broken the recent downtrend which was able to keep pressure on stocks since April. The bad news is the market is getting very overbought and could take a little break in the coming days.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk It will be totally healthy to get some kind of a pullback with the indicator this high, but it would be almost predictable to see the market give us another scare type day, just to keep us on our toes. The market never really likes to make you feel comfortable. If that circled area on the 2007 chart is going to play out, expect the ups and down to remain volatile to try to keep you leaning the wrong way. Thanks for reading. We'll see you back here tomorrow. Tom Crowley |