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Stuck

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10/21/11

Stocks bounced around again yesterday and when the music stopped, the indices were mixed but the Dow's 37-point gain made it 11 straight days of down - up - down - up... closes.



For the TSP, the C-fund was up 0.46% yesterday, the S-fund gained 0.34%, the I-fund fell slipped 0.06%, and the F-fund (bonds) gave up 0.04%.

The S&P 500 is still stuck between the 50 and 200 day EMA's, although yesterday's action made a lower low and a lower high. It could be rolling over into a short-term top, or it could be working off the overbought conditions preparing for a breakout.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk


The strength had been coming out of the tech heavy Nasdaq Index but Apple's earnings seems to have taken the steam out of the Nasdaq over the last couple days as it tested the support of the 20 and 50-day EMAs for the first time in a couple of weeks. We saw a decent intraday reversal as you can see by the kangaroo tail on yesterday's bar.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk


Today is options expiration Friday and options traders are usually playing a lot of games in order to have their options close at specific prices. For that reason we don't usually see too much movement on options Friday, but the following Monday becomes recipient of these traders unloading their positions - like a big exhale.

History has some strong seasonal data on the Monday following October's options expiration week. According to sentimenTrader.com:

"Out of the past 29 years in the S&P 500 futures, the Friday of October option expiration has managed a gain of more than +1% only 1 time (in 1990). It dropped more than -1% 5 times. Mostly, it just shows minimal gains or losses, in about equal measure.

"Between 1982 and 1996, the Monday after expiration was negative 11 out of 15 years. But since then, Monday has been positive every year, a perfect 14 for 14 record, with an average return of +1.3%. That's about all the longer the festivities lasted, as returns dropped back towards random after that."

Of course this weekend there are some very important meetings in Europe that would override any seasonal data, and we could have some big news on Monday that could be a market mover. I heard that the eventual announcement could actually come as late as Wednesday, but the rumors are changing hourly it seems, and I won't believe anything until I see it.

The
TSP Talk Sentiment Survey came in at 40% bulls, 49% bears, for a bulls to bears ratio of 0.82 to 1. That is a neutral reading in a bear market which means the system will remain 100% G Fund for next week.

Thanks for reading! Have a great weekend!

Tom Crowley



The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.


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Comments

  1. tsptalk's Avatar
    Out of the past 29 years in the S&P 500 futures, the Friday of October option expiration has managed a gain of more than +1% only 1 time (in 1990). It dropped more than -1% 5 times. Mostly, it just shows minimal gains or losses, in about equal measure.
    It's early yet, but so much for history.

    "Between 1982 and 1996, the Monday after expiration was negative 11 out of 15 years. But since then, Monday has been positive every year, a perfect 14 for 14 record, with an average return of +1.3%. That's about all the longer the festivities lasted, as returns dropped back towards random after that."
    Since we look to be breaking historical streaks, I wonder if the prefect 14 of 14 for Monday is in jeopardy now?

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