TSP Talk Blog

4/10/12

On Friday morning, the Dow futures dropped 120-points shortly after the jobs report was announced. Yesterday the Dow lost 131-points. This tells me that the initial sell-off did not scare too many folks out expecting things to get much worse, nor did it bring in many buyers. As a matter of fact, volume was the lightest of the year so I think investors watched it like a deer in headlights, not sure exactly what to do.


For the TSP, the C-fund dropped 1.13% yesterday, the S-fund lost 1.45%, the I-fund was down 0.25%, and the F-fund (bonds) gained 0.53%.

The S&P 500 lost 16-points, or a little over 1%, but remains above the key support levels where the 50-day EMA meets up with the rising support line and the 2011 high. As I mentioned, the jobs report scare surprisingly produced the lightest trading volume day of the year which tells me that there was not much conviction in the selling.

A nice high volume reversal day in the next couple of days, that tests the strong support might be nice, but I'm not sure we'll even get that - without another negative catalyst. With earnings season kicking off this week, we may get that catalyst, but the charts wouldn't suggest anything worse than that.


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

The Dow Transportation index got hit pretty hard yesterday, but this leader, which has been lagging this year, is still above the prior two lows...


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

... while the S&P 500 is below the recent mid-March lows. This could be a positive sign unless of course the leader is continuing to lag and will eventual match the S&P and make a lower low - but that is not the norm.


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

The NYSE is as oversold as it has been all year. That's not much of a surprise considering the bull market run that we've been in, but if the -500 area is going to hold again, we may have seen the low on this dip.


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

The yield on the 10-year T-note finally filled the two open gaps we have been watching, but in doing so it created a huge gap above between 2.04% and 2.14%.


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

The question will be whether this drop was an emotional reaction to the jobs report that will quickly be filled, or if bond traders are really interested in bonds (remember, bond prices and the F-fund go up when bond yields go down.) Investors tend to turn to bonds when the stock market is in trouble so if stocks start to move back up, it is likely that the folks who bought bonds yesterday will look to sell.

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

Tom Crowley


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