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Jiffy Lube

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02/27/12

After some ups and downs, stocks ended the day mostly flat on Friday. The Dow dipped 2-points and the S&P 500 added 2. Can the overhead resistance of the 2011 high be broken, or will stocks slip on Greece and/or oil?


For the TSP, the C-fund was up 0.18% on Friday, the S-fund slipped 0.05%, the I-fund gained 0.96%, and the F-fund (bonds) was up 0.04%.

The S&P 500 is testing the 2011 highs after rising sharply for 2 months. Despite the fact that we have been saying this for weeks now, it would seem logical to expect a little pullback here at resistance. But this rally has not been typical and who knows what surprises it has in store for us? What happens next may all depend on oil and the dollar.


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

With the price of oil moving to near $110 a barrel, the economically sensitive Dow Transportation Index, which is greatly impacted by the the price of oil, has been pulling back. We did see a bit of a reversal day on Thursday, but on Friday it closed below the 50-day EMA again. We'll have to watch for what looks like a new downtrend, but first on the list is that 50-day EMA.


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


The small caps of the Russell 2000 have been consolidating for the entire month, hitting resistance in the 830 area while finding support near 810-815 and the 20-day EMA.


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


The question is, is this a top forming, or just a reloading period before the next leg higher?

As we said, oil is up near $110 a barrel after the recent breakout above the inverted head and shoulders. The 2011 high near $115 could be the next target, but as we have been talking about, the technical target based on the inverted H&S is closer to $130.


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


If the recent weakness in the dollar continues, it will probably push oil to that $115 area before long.


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


The dollar's weakness has also kept the stock indices afloat and has particularly helped the stocks of the I-fund as it is the leading fund in February with a gain of 6.0%.

The TSP Talk Sentiment Survey came in at 48% bulls, 41% bears, for a bulls to bears ratio of 1.17 to 1. That is another buy signal in a bull market which means the system will remain 100% S Fund for this week.

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.

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Comments

  1. Sensei's Avatar
    Holy moley. DAX down big right now. Could this be the first -1% day for the S&P in 2012?
  2. MrJohnRoss's Avatar
    Hahaha! Jiffy Lube.

    Will stocks slip on Greece and/or oil? Heheheheh.

    Very clever Tom!
  3. tsptalk's Avatar
    I'm glad someone got it.

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