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Market Comments July 13, 2011 Current TSP Share Prices Twitter

Today's Commentary

Interesting action Stocks were all over the place yesterday as the futures were sharply lower in the early pre-market trading hours, the open was flat, we saw seesaw action above and below the break-even mark for much of the day, then a quick, sharp spike higher after rumors of a QE3 spread, followed by a weak close.  The Dow closed down 59-points.            The S&P 500 is in an interesting position.  There is some pretty strong support just below, but the action has been so flaky lately that any economic news, home or abroad, could send the indices reeling... or flying.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Looking at the current chart, I have a hard time finding a reason to be a seller, right here, right now.  We just had a pullback in a newly established up trend, and the S&P is sitting on support.  However, with the chaos in Europe and the ongoing serious debt issues we face in our country, and not many solutions coming out of Washington, it is easy to be very concerned that the market is not stable as it is being thrown around like a rag doll lately.  If the S&P's  support is broken, I could have that reason to sell.  The charts could easily change while the news and fundies remain the same. I am not a big fan of using the fundamentals to help guide my investment / trading decisions.  It has been my experience that the news and data does not correlate closely enough to the short and intermediate-term action of the market.  If anything, it's the charts that seem to predict the news. Predicting market action is difficult.  I wish I could be confident in predicting what the market was going to do - picking tops and bottoms, etc., but in reality following what the market is actually doing instead, is a more reasonable expectation.  Of course we have to make a decision at some point so we do have to make predictions.  For example, as we said the S&P 500 is currently sitting on support.  It will either hold and rally, or break down in the coming days.  What do we do?  If it breaks, I'm likely to sell - predicting that if/when support breaks, it is bearish.  If it rebounds off of support I would prefer to be a buyer - predicting that if support held it will lead to higher prices.   I am a big fan of using extreme sentiment readings as a contrarian indicator, and that includes my own sentiment.  The late sell-off yesterday scared the heck out of me, not knowing if support was about to be taken out or not.  My own fear usually means the market is about to rally.  As I said, the support in the chart tells me to be bullish, but the late dive in the market yesterday put enough fear in me to raise some cash in my IRA account - only because I know I have more flexibility in that account and I can buy back in today at any time without a problem.  That is opposed to our TSP accounts where we have a deadline and a transfer limit to deal with.  That makes our decisions less forgiving.   Now that the markets are closed and the emotions are calmed down, my own little panic selling late yesterday tells me that I may have been overly bearish at a time when the market could find support.  Good luck whatever you decide.  It's not an easy call here.  When in doubt, go with your head and against your emotions. Thanks for reading!   We'll see you back here tomorrow. Tom Crowley Click here to discuss today's Market Commentary

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