The bulls keep the pressure on
Stocks rallied yesterday as
the Dow picked up 147-points, small caps soared, and the dollar fell.
I look at it as a relief rally in that we saw the gushing oil well being
successfully capped, the financial reform bill has been all but finalized so
the banks know what they are going to have to deal with, and earnings season
has started off with no negative surprises. That a lot of relief to
market that had been expecting the worst early last week.
For the TSP, the C-fund
gained 1.54%, the S-fund
jumped 2.72%, and the I-fund gained 1.69%. the F-fund (bonds) fell 0.16%.
Considering what we were dealing with just a week ago, it is amazing
that the S&P 500 is now trading above the 20, 50, and 200-day EMA's,
although the 50-day EMA is still below the 200-day EMA.
The S&P now has to deal with the descending trend line, and with Intel
reporting a very strong earnings report after the close yesterday, it
appears that the resistance will be broken, but we have seen strong
mornings turn south by the close before - particularly after an Intel
report - so I will feel a whole lot better after the S&P closes above
that resistance for a couple of days.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The Dow,
the Nasdaq, and the Dow Transportation Index have all closed above their
200-day EMA's, but the Naz and the Transports are up against their
50-day EMA and all of them are still in a downtrend.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
The market is overbought and there is work to be done to break the
downtrend, so the market is not out of the woods yet, but it is off to a
good start.
I am still not a fan of being overly bullish for the long-term, but I do
want to milk this rally for as much as I can as market gains may become
tough over the next couple of years. As I said, we're seeing
overbought conditions, but there is still enough bearishness out there
to fuel a rally.
I'm too
lazy to go look, but I believe I mentioned the other day that the dollar
might have to break support if the rally was going to continue.
Yesterday the dollar did break that support and a move down to the
200-day EMA over the next week or so could
help add
fuel to a
continued rally. The bearish Outside Day is a negative formation
going forward.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP
Talk
Stocks have been up six consecutive days now, so of course we are due
for some kind of pullback, but the excessive bearishness we are seeing,
and we have talked about the last couple of days, could keep any
pullbacks from being overly severe.
I wouldn't
mind booking some gains in my TSP account, but I wouldn't be able to buy
again until August as I would have used my two July IFT's. I am
usually an all or nothing guy when it comes to the stock funds (all
stocks or no stocks) but perhaps just slowly using my unlimited moves
into the G-fund would not be a bad idea, as the market climbs.
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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