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Coolhand's Market Analysis

Major Indexes Post Weekly Gain

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2006 tsp becomes unlimited?-images-jpg

It was a fairly quiet day for the markets, although the major averages did see some moderate weakness earlier in the trading session. But that didn't last too long as the indexes traded back up to chop along the neutral line for most of the balance of the day. At the close, the results were mixed as the Dow dropped 0.34%, with the Nasdaq and S&P 500 posted gains of 0.86% and 0.09% respectively. And what began as a very bearish start for the market in Monday's trading, saw the indexes roared back to post weekly gains of about 2.5% for the Nasdaq, 2.2% for the S&P 500 and 1.6% for the DOW.

Earnings continue to be overall positive, which was expected.

And while there has been progress made in debt talks on the other side of the pond, our own debt talks have been somewhat contentious with no resolution in sight.

Let's see if the charts are giving us any clues for what to expect next week:

2006 tsp becomes unlimited?-namo-nymo-jpg

Both NAMO and NYMO ticked a bit lower today, but remain in buy conditions.

2006 tsp becomes unlimited?-nahl-nyhl-jpg

NAHL moved a bit higher, while NYHL dropped. Both remain in buy conditions.

2006 tsp becomes unlimited?-trin-trinq-jpg

TRIN moved a bit higher, but remains in a modestly bullish posture. TRINQ however, spiked quite low and is highly suggestive of an overbought index. The last time it spiked near this level was on Jun 21st. The S&P fell about 2% over the next 3 trading days after that reading, while the Wilshire 4500 shed about 1.2%. But that's not to say selling is necessarily imminent. When these readings get extreme I look at them from a contrarian viewpoint, which is to say that TRINQ is showing a very bullish reading, which like sentiment can result in a reversal in the very short term.

2006 tsp becomes unlimited?-bpcompq-png

BPCOMPQ managed to tick upward just a bit, but remains in a sell condition.

So the signals overall "look" bullish except for that BPCOMPQ reading, which tells me that risk is still elevated. But we all know that given the debt ceiling talks and all the implications that carries; whether a solution is reached or not. I tend to see this week's rally as a buy the rumor event, and we certainly had rumors; including the one the NY Times leaked that said a solution may be near, which was quickly dispelled by the President's Press Secretary.

So I see this market as toppy, as the S&P 500 is near the top of its channel and I've got an extreme bullish reading on TRINQ, which suggests weakness could come soon. I am very aware that should the debt ceiling talks produce a near or long term solution that this market may not react the way many might expect. I missed a chance at an entry on Monday, but in a news driven market it's almost impossible to know when to pull the trigger. So I remain in the G fund for now. But another chance will present itself eventually. It always does.

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