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Looking for
clues Stocks were higher on Friday but it took a late rally to take it from the red into positive territory. Late rallies have been rare lately as we have been seeing a lot of selling near close. The late money is usually considered smart money. The Dow gained 43-points.  For the TSP, the C-fund was up 0.56% on Friday, the S-fund gained 0.80%, the I-fund lost 0.35% but should should see some of the late U.S. rally on Friday in today's price, and the F-fund (bonds) added 0.06%. For more on the weekly and monthly returns, please see our TSP Weekly Wrap-Up. There is so much going on that should affect the fundamentals of this market, but it can be distracting. We obviously have the debt ceiling negotiations, which are going nowhere fast, and in European Union stress tests on the banks have been the main story. Many are passing the tests, but several did not. I don't know how to decipher all of that so I keep looking to the charts for clues. The S&P 500 popped back over the 20 and 50-day EMA's, which is a relief for technicians, but I see that Sunday night's market futures are pretty negative and will likely test those EMA's at the open.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Monday morning gap openings, up or down, are not something that can always be trusted. It is usually emotional money and we are better off watching the action for a couple of hours before coming to any conclusions. Any downside action will test the strength of what appears to be a decent bull flag, although the descending flag portion is a little steeper than you'd like to see. A gap down won't help Friday's positive reversal day of the Dow transportation Index. Normally you'd like to see follow-through action in the direction of the reversal, after a reversal day, and the prior day's low tends to act as support.  The bulls will be looking at 5313 to act as support today, which was Thursday's low on the Transports.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The put / call ratios are showing that the smart money is getting less bearish than they were before the spring sell-off. The dumb money became very bullish during that big two-week rally, but recently they have turned negative again - although not at an extreme level.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This
likely means the smart money is willing to buy the dips while the dumb money
does what they do, which is get bullish when the market is going up, and
bearish when it goes down. Tom Crowley |
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