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Market Comments

June 16, 2011

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Today's Commentary

Wild Wednesday

Turnaround Tuesday ran into Wild Wednesday and the big gains we saw earlier in the week have disappeared, and then some. The Dow lost 179-points. Are we in for a 7th week in a row of losses?


For the TSP, the C-fund dropped 1.74% yesterday, the S-fund fell 1.64%, the I-fund plummeted 2.83% as the dollar rallied strongly, which also helped the F-fund (bonds) rally 0.46%.

The S&P 500 made another lower low yesterday overhead resistance held, but again managed to close above the 200-day EMA.


                       Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The technical picture is poor but as long as the S&P remains above the 200-day EMA, there is hope for the bulls that this is just a pullback in a bull market.

Day after day I show the evidence of sentiment being overly bearish, which is bullish for stocks at these extreme levels, and indices being oversold, but the market has not been able to put together more than a few days of gains before the selling resumes. Here's the latest indicators:

The Climactic Volume Indicator has made higher lows recently, while the S&P has made lower lows. This is a positive divergence - something we tend to see before a reversal.

                       Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The Volume Trend Oscillator is hitting levels that have also come near the bottom of market pullbacks.
The I-fund lost nearly 3% yesterday and a lot of that was due to the nearly 2% rally in the dollar. The dollar has now broken above its descending resistance line but will have to contend with the 200-day EMA if the rally continues.

                       Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

The continued troubles in Greece have helped strengthen the dollar and the problems across Europe don't seem to be going away. If anything the news is getting worse.

Today is the 12th trading day of the month and for some reason, historically we see a lot of up and down choppy action during this time of June. With Tuesday being a very positive day, and Wednesday being a very poor day, perhaps today will take its queue from this chart...

                                     Chart provided courtesy of www.sentimentrader.com

If we need a little bullish news, the first couple of weeks of July are historically positive...

                                      Chart provided courtesy of www.sentimentrader.com

... but we have to survive the rest of June first.

Thanks for reading! We'll see you back here tomorrow..

Click here to discuss today's Market Commentary Tom Crowley

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