Where's the support?
The market
opened higher yesterday, but quickly gave up the gains and spent the rest of the day in negative territory. The
TSP stock funds lost between 0.94% and 1.82% with the S fund getting hit the
hardest. The F-fund (bonds) were up 0.14%.
There was a weaker than expected existing homes sales report yesterday that
didn't help matters, and we have talked before how important it is for the
housing market to lead the way for the market and the economy.
The S&P 500 is now solidly back into the trading channel but it did find
some support at the 20-day exponential moving average (EMA) yesterday, which was our
first pullback target area.
During bull markets, the 20-day EMA can offer enough support before the
rally resumes.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
If the 20-day EMA does not hold, the next few levels we were watching were
1016, the gap that remains open on the S&P chart, and the 50-day EMA -
currently 1010 and rising. Then there is the bottom support of the
trading channel.
The NYSE overbought/oversold indicator is now neutral but if you recall, the
indicator has an eleven month trend of rising oversold levels.
Chart provided courtesy of
www.decisionpoint.com, analysis by TSP Talk
If this pullback continues, this trend will be tested quickly. If it
does break, we may have to consider the possibility that we are seeing the
start of a more significant correction. But this is just one of the
many pieces to the puzzle and I don't want to let one indicator dictate my
action.
The TSP Talk Sentiment
Survey did a quick reversal. After last week's 1.57 to 1 bulls
(55%) to bears (35%) ratio, this week's survey came in at 0.80 to 1 bulls
(39%) to bears (49%). That is overly bearish and keeps the system on a
buy signal for next week.
I will seriously consider buying back into he stock funds somewhere between
here and the S&P 500 hitting the 50-day EMA. If the correction continues and
takes out the 50-day EMA, then I'll get to use my "get out of stocks free"
card (our extra transfer) to bail into the G fund.
As a reminder: You get two transfers per month, but after that you can move
money into the G fund at any time - either all at once, or slowly. As
long as the G-fund is the only fund whose allocation is increasing.
It turns out that post option
expiration week was weak, as we suspected it might be. Today we get a
new homes sales report plus the Michigan Consumer Sentiment report so it
could be another volatile day.
That's all for today.
Thanks for reading! Have a
great weekend!
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