Holiday choppiness
Stocks pulled back on Friday, after Thursday's big rally. The
losses were sharp but they gave back less than half of the prior day's
gains.
The Dow gave up 122-points in the light volume, pre-holiday trading.
For the TSP,
the C-fund gave back 1.23%, the S-fund lost 1.15%, and the I fund
dropped 1.46%. All of the losses were just a fraction of the gains made on
Thursday. The F-fund was up 0.20%.
Here are the weekly results, and the final returns for May.
The S&P 500 has now
been chopping down, up, down, up, etc., for 7 straight days. That
doesn't tell us too much except for possible indecision by investors and
a mix of sellers selling rallies, and buyers buying the dips.
After nearly 4-weeks, the S&P continues to trade within the May 6th
trading range and buying at or below that level has paid off, as has
selling at the top of the range.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
Volume was
light leading into the holiday weekend, which isn't a surprise, and the
pre-holiday action can be a little misleading at any time, but the
choppy action makes this coming week very unpredictable.
I still like the setup for a short-term bounce off of the lows, possibly
back up to the top of that May 6 range or, like in 2007, possibly up to
new highs, but I am not as optimistic past that point.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
There is still overhead resistance from both the 200-day EMA, and the
descending trend lines, so I will feel a lot better about my prediction
if the S&P can break those levels first.
On the bullish side we have positive readings in both investor sentiment
(overly bearish), and the overbought/oversold indicators, although the
big bounce on Thursday took them off of their most extreme levels.
I got back in town pretty late last night so I am going to cut this
short. I don't know how the news from Israel is going to play out
in the market this week, but the stock futures are only down modestly as
I write this so perhaps it won't have a big impact.
I'll leave Friday's commentary below in case anyone missed them.
It basically lays out the reasoning for my short-term bullishness.
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
05/28/2010
Relief
Stocks rallied out of the gate on Thursday morning and, after several
days of early weakness / late strength or early strength / late
weakness, the market was able to hold onto and add to, the early gains
into the close, as the the Dow ended the day up 285-points.
The TSP stock funds soared.
The C-fund
gained 3.33%, and it was the laggard. The S-fund jumped 4.2%, and
the I fund picked up an amazing 4.88%. The F-fund
slipped 0.39% as investors chose stocks over bonds.
The S&P 500
broke through some short-term resistance as it rallied up to the 200-day
EMA. As we have been saying, the overhead resistance has become
heavy and volatility will likely persist and keep us from feeling
confident about a rebound, despite the classic reversal set up.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
We have many indications that this could be the real deal, and may be
the start of a decent rally, but the low pre-holiday volume gives us a
little pause. Some follow-through today would help, but I will be
interested to see what happens on Tuesday as many times pre-holiday
action is reversed after a long holiday weekend.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The NYSE overbought / oversold indicator is back over the neutral mark
and up against that descending resistance line. Another obstacle
in the way and a test of the strength of this potential market rebound.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
On the bright side, put/call ratio sentiment is still quite bearish from
the "dumb money", which should be bullish for stocks. At the same
time the "smart money" put/call ratio is much more bullish (which is
also bullish). Dumb money = contrarian indicator.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
Nothing is easy in this game and I am certain the market will do
everything possible to try to make us lean the wrong way. We have
a nice set up for a continued rallied, but we will more than likely see
some ugly days in the near future, just to keep us guessing.
Thanks for reading. I will be
going out of town for the weekend starting this morning so I may not be
checking my email until later this afternoon or evening. Also, I won't be
posting a Weekly Wrap-Up
this weekend. My brain needs some down time.
Have a great Memorial Day weekend!
Remember Those Who Served
Tom Crowley
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