TSP Talk Blog

02/01/12

Stocks opened sharply higher yesterday, but quickly sold off the rest of the morning. The indices found support just before noon where buyers slowly took them back toward the break even level by the close. The Dow lost 21-points.


For the TSP, the C-fund lost 0.04% yesterday, the S-fund dipped 0.02%, the I-fund was up 0.40%, and the F-fund (bonds) was up 0.15%.

Here are the final returns for January. A lot of green:



As we talked about, the old support of the narrow trading channel may now act as resistance, although if the S&P 500 continues to climb below that resistance line, the angle of incline would remain the same. The 20-day EMA held on its first test on Monday, and if we are in a bull market period that remains stable, these pullbacks to the 20-day EMA could be all we get for a while.


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

We've seen this type of action many times over the years. Here are a few examples from 1997 and 1998.

During that period we saw 3 extended rallies that did not fall below the 20-day EMA. If you missed the rally and waited for a pullback, you waited a long time. And while these rallies eventually broke, the sell-offs were not necessarily severe as some saw minor declines with mostly sideways consolidation before the next leg higher.


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

I don't know if that is what we'll get this time, but no one really knows what will happen. I like to look at the old charts to see if they give us any clues, and right now it looks like the bulls can ride this until the 20-day EMA breaks. If you're missing this rally, you can either be patient and wait it out, or you might decide to take a chance on the next pullback to the 20-day EMA.

We all get our new February IFT's starting today, but use them wisely. We only get one chance to buy each month. And speaking of IFT's, there has been some talk among the members of the message board looking into an effort to increase the IFT limit. We'll see how it goes.

A reminder that we have the jobs report on Friday. The briefing.com consensus estimate recently dropped from 170,000 non-farm payroll jobs, to 155,000.

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.