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Market Comments June 9, 2011 Current TSP Share Prices Twitter

Today's Commentary

Oversold Stocks chopped around between positive and negative territory for most of the day yesterday.  By the close, the Dow lost "just" 21-points but the broader indices fared a little worse.                      For the TSP, the C-fund lost 0.40% yesterday, the S-fund fell 1.02%, the I-fund dropped 1.08%, and the F-fund (bonds) added 0.21%. The S&P 500 is breaking down and heading straight for the 200-day EMA.  With the 20-day EMA recently crossing below the 50-day EMA, we have to take a more cautious approach, although ironically, these crosses tend to be a sign of being oversold and many times trigger a relief rally.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Here is a chart of the Networking Index which illustrates the type of action I would expect from the S&P 500 in the coming weeks.  The 20-day EMA moved below the 50-day EMA and almost immediate a 4-day rally ensued.  The rally ran right into the 50-day EMA, which then acted as resistance, and the downside action continued.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The thing to watch in the S&P 500, is how it reacts should this action play out and rally up to the 50-day EMA.  A move above the 50-day EMA would have to hold for 3 days before I would feel good about this being an intermediate-term bottom, rather than a short-term relief rally. The NYSE is now down below the -500 area on the overbought / oversold indicator.  Assuming we are still in a bull market, this should be a spot where we see some buyers step up.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk We are certainly seeing enough warning signs that we should not be surprised if this market turns into a full blown correction (-10%) if not a bear market (-20%).  But that doesn't mean we won't have an occasional rally.  My plan is to sell a rally should the 50-day EMA get tested and fail.  Thanks for reading!  We'll see you back here tomorrow.   Click here to discuss today's Market Commentary Tom Crowley

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