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| Today's Commentary |
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Big day today? Which
way? Stocks drifted higher yesterday on the lightest volume since Christmas week. The Dow gained 45-points. For the TSP, the C-fund added 0.50%, the S-fund gained 0.99%, and the I-fund was up 0.47%. The F-fund (bonds) slipped 0.02%. Yesterday I mentioned the Financial Times article that said, "The Federal Reserve is set to downgrade its assessment of US economic prospects when it meets on Tuesday to discuss ways to reboot the flagging recovery." The market proceeded to rally most of the day when it sure seemed like news that would spook investors. Finally, I heard a reasonable explanation. Besides the fact that the market doesn't always react to news the way you would expect, the downgrade of the economy by the Fed could mean more money (liquidity / quantitative easing) being pumped into the system. When money is cheap, stocks don't tend to go down very easily. Today we could see a big day - which way, I don't know. But the Fed is going to address the above statement today and it could be a market mover. I still think the rising wedge, the overhead resistance, the moderately overly bullish sentiment, the continued negative divergence in the MACD indicator, and the negative seasonality of August and September, might favor the downside, but never underestimate the force of momentum - although the consolidation is indicating that upward momentum is slowing. The S&P 500 is still riding the rising wedge and has now been coiling in a range for several days. This coiling could be the precursor to a big move. Our Ebbchart System is flagging it as a big day, but sometimes those big days are up, and sometimes they are down.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Could it be a turnaround-Tuesday, or does the rally continue? I'm on vacation this week so I will be cutting the commentaries short. Thanks for reading! I'll touch base again tomorrow. Tom Crowley |