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The Fed
Flop Stocks opened lower yesterday but stabilized quickly and the indices were in positive territory until... The Fed. The Dow lost 80-points and all of those losses came after the 2:15 ET FOMC announcement.  For the TSP, the C-fund was down 0.64% yesterday, the S-fund lost 0.54%, the I-fund picked was off 0.43%, and the F-fund (bonds) added 0.06%. The news was nothing that wasn't expected, but the Fed saying that growth appears to be slowing was as good of a reason as any for traders to take profits after the recent 4-day during a nervous period for the market. The S&P 500 gave back about half of Tuesday's gains yesterday and I am not too worried yet about this being anything more than a short-term emotional reaction... yet. There are some obvious concerns as I will point out below... Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The old support line (red) / turned resistance, may again be the support line we need to watch on the downside. On the upside the 20-day and 50-day EMA's are the barriers the index needs to concur, otherwise this will turn out to be nothing more than a relief rally in a correction. Being between the support and resistance doesn't give us much to go on at the moment, but the longer we don't see a test of the 50-day EMA, the more likely we'll see more downside action. The Dow Transportation Index only lost 0.2% yesterday but the reversal pattern does not look all that promising. The bulls will want to see this index retrace yesterday's long tail today, other wise we could see a couple days of pullback.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk That wouldn't be horrible. We did have a 368-point rally in the Dow off of the last week's low so a little backing and filling seems reasonable. It will be interesting to see if this index can find support at the 50 and 20-day EMA's on any pullback. The chart of the broader market index, NYSE, is also troubling. We have a clear head and shoulders pattern breakdown, followed by a test of the neckline.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk If this plays out like a typical head and shoulders pattern...  ... then this recent rally may be close to running out of steam. If we don't see some morning gains today before the noon ET deadline, I may use my first IFT of June to step aside while the market decides if it wants to break above the 50-day EMA or head south again as the NYSE seems to be indicating. This morning's initial jobless claims report may dictate that action. Today is the 17th trading day in June and for some reason the market struggles during this 3 or 4 day stretch in June (See chart below) and early July is very choppy. Thanks for reading! We'll see you back here tomorrow. |
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