TSP Talk Blog

1/19/12

Stocks opened higher yesterday and they broke their recent trend of moving against the initial morning direction. The indices managed to hold onto those gains, and close near the highs. The Dow finished the day up 97-points.



For the TSP, the C-fund was up 1.13% yesterday, the S-fund gained 1.62%, the I-fund added 1.25%, and the F-fund (bonds) lost 0.18%.

Yesterday's action really put the squeeze on the bears who are experiencing what happens when they try to fight the market momentum. Our indicators were showing signs of stocks being extended but price action trumped them and the indices are still climbing.

The recent 5-day tight closing range was bound to break sharply one way or the other, and like the market likes to, surprised a lot of folks by breaking upward, and making new multi-month highs.


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

Beginning today we get a plethora of earnings from some major companies including Intel which good or bad, does have a tendency to produce a climax of sorts - particularly when the Nasdaq 100 is within 2% of a high, going back to 1997.


Chart provided courtesy of www.sentimentrader.com

The dollar remains in a strong uptrend but it has pulled back over the last couple of days and is now testing the lower end of the ascending trading channel, as well as the 20-day EMA.


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

The PMO indicator has rolled over into a sell signal but we saw that at the end of December as well and it turned out to be just a short-term dip in for the dollar. But those double PMO sell signals tend to have a little more to them than that. If that uptrend can break, we could see more fuel for the stock market rally.

The other day I said, "...if I do sell I will be out of IFT's for January. Another option is to keep a partial allocation in the stock funds and use our unlimited transfers into the G-fund to move out slowly should the rally continue. I will be watching the current short-term trend for signs of a breakdown."

Well, I did make a partial sell that day so the bad news is I sold right before yesterday's rally. The good news is the partial move allowed me to pick up some of those gains. You never know know how long these momentum rallies will last, but selling into the rally on the way up and banking some gains is not a bad idea. That gives you some cash to put to work when the inevitable pullback does come. But in a bull market, being aggressive is the way to big returns. Some on our AutoTracker members already have returns of +5% to 6% in 2012.

Thanks for reading! We'll see you back here tomorrow.

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.