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| Today's Commentary (Short Term Outlook) |
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Over 50, under 200, or in
between? The market action was rather sedate on options expiration Friday as stocks were flat to slightly higher most of the day. The Dow was up 16-points and closed above the 50-day EMA for the first time since mid-May. For the TSP, the C-fund picked up 0.13%, the S-fund made 0.01%, and the I fund gained 0.31% while the F-fund slipped 0.07%. For more on the weekly and monthly returns, please see our TSP Weekly Wrap-up. Although the Dow, the Nasdaq, and the Dow Transportation Index have all closed above their 50-day EMA, the S&P 500 has failed to do so, so far. Hopefully, being the lagging index that it is, it is only a matter of time before it follows the leaders.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The NYSE overbought/oversold indicator is still overbought, but off of the extreme readings, and this justifies the recent sideways action in the market. It is a good sign that the market is not pulling back as it reaches the oversold levels, but instead consolidating. If this turns out to be a valid sign, we probably won't see this indicator move much below -0- before another push higher begins.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk There is a lot going on around the world from the spill in the Gulf and the credit issues in Europe, to the U.S. 9.7% unemployment rate and China possibly lifting the fixed rate it has to the U.S. dollar, but the only thing I am concerned with right now is whether the S&P 500 can stay above the 200-day EMA, and if it can get above the 50-day EMA. Since the stock market is a leading economic indicator, the S&P 500 will probably be the best predictor of how it all plays out. Although I do try to keep up with the economic news, I don't let all of the noise impact my decisions. The charts and the indicators have a good track record of telling us what is going on and whether the events will be good for stocks or not. Right now, the charts and indicators are telling us that something positive is happening. It could all change overnight if the market starts heading south again, but we will know that by the S&P failing to break the 50-day EMA mark (1120), and even more so if the 200-day EMA (1099) fails again. The TSP Talk Sentiment Survey came in at 50% bulls, 40% bears for a 1.25 bulls to bears ratio. That is still a bull signal during a bull market (defined as the 50-day EMA trading above the 200-day EMA). Thanks for reading. We'll see you tomorrow. Tom Crowley |