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| Today's Comments (Short Term Outlook) | ||
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Pullback
pauses After two consecutive sell-offs, stocks rallied yesterday to break their losing steak. The Dow picked up 83-points and the TSP stock funds gains 1% to 1.5% while bonds were down 0.26%. The S&P 500 gained back almost half of Monday's losses, pushing back above the 20-day EMA. Volume was very low, one of the lowest trading volume days of the year, so we can't say buyers were enthusiastic about jumping in front of the recent pullback.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Remember a week or two ago when we talked about why gaps show up on the Nasdaq chart much more than on the S&P 500 chart? Monday's weak open showed us a good example of that. You can see in the chart of the Nasdaq (below left) that there was a large 20-point gap down on Monday morning (1970 to 1950). Yesterday's rally took the index back up 9.5 points above Monday's high, which filled about half of the open gap. Sometimes these gaps get filled right away, and sometimes it can take months, but it wouldn't surprise me if we saw the gap get filled quickly, before any downside continued. The S&P 500 on the right side did not even create a gap, so there is no gap to fill. But, we could see a move back up to Friday's low anyway, around the 995 area, as that could be a resistance area as well.
We saw a pause in the sell-off that could see a little follow-through this morning, but once those gaps and resistance areas are hit and filled, watch for the downside to resume. That's all I have for today. Thanks for reading! See you back here tomorrow! |
