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| Today's Commentary |
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Flat day Stocks dropped in the morning, rallied in the early afternoon, and fell again into the close as most indices finished basically flat. The Dow gained 5-points on the day. For the TSP, the C-fund gained 0.04% on Tuesday, the S-fund added 0.09%, and the I-fund picked up 0.43%. The F-fund (bonds) was up 0.19%. For the month of August, the C-fund lost 4.51%, the S-fund dropped 5.59%, and the I-fund fell 3.14%. The F-fund (bonds) was the leader at +1.28, and the G-fund gained 0.22%. The S&P 500 continues to test the neckline of the large head and shoulders pattern (H&S), although that July low may confuse things a bit. The longer term trend remains down, but there is a lot of room on both the up and down sides before the longer-term trend lines (blue) are tested.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Taking a look at the large H&S patterns from the 2007-2008 bear market, you can see that there can be short, sharp rallies up to that upper resistance before it breaks down, so I am not ruling out a possible move up toward 1100, even if this H&S eventually breaks down.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Taking a closer look at the S&P, you can see that a smaller H&S pattern has already been broken and the neckline has been part of the overhead resistance. There are a few H&S pattern on the S&P chart, and this magnifies the possibility of a bearish outcome (even if we get that sharp rally to 1100 first).  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk You can also see that the descending short-term trading channel continues to hold. We've been in a 6-day consolidation and we're still trying to figure out which way this sucker wants to go first; Back up to 1100, or a breakdown of the H&S.  The Dow Transportation Index is also in some trouble as it fell below the 200-day EMA and that became resistance when it tried to rally back. Plus the H&S is testing the neckline and like the S&P, could easily breakdown.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Volume wasn't too bad yesterday as the indices found some buyers after a better than expected consumer confidence report and a more assurances from The Fed (FOMC meeting minutes). But the rally was short-lived and the indices finished flat to lower. (The Nasdaq was down 0.3%.) The big economic report will be released on Friday morning - the jobs report. Estimates for the August jobs report are for a loss of 120,00 jobs, a gain of 44,000 private sector jobs, an a slight increase in the unemployment rate to 9.6%. The futures are up solidly as I write this Tuesday night and we are heading straight into the holiday trading that tends to throw us a curve before the holiday, and correct itself after the holiday, so be careful. Thanks for reading! We'll see you back here tomorrow. Tom Crowley Here is some seasonality chart for September and the holiday: .  Chart provided courtesy of www.sentimentrader.com Returns-wise, September is actually the worst month of the year, historically. At least it was between 1950 and 2005.  Chart provided courtesy of www.sentimentrader.com |