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Reversal worked, then Apple

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4/25/12

We saw steep losses in stocks on Monday but as we mentioned yesterday, despite the losses, there was an decent intraday reversal and the indices closed near the day's highs that day. Reversals such as that tend to create a follow though day, which is what we got on Tuesday. The Dow finished off its highs, but did gain 74-points on the day.


For the TSP, the C-fund gained 0.37% yesterday, the S-fund was up 0.38%, the I-fund made 0.94%, and the F-fund (bonds) lost 0.09%.

The S&P 500 is back above the 2011 high and the 50-day EMA, but closed for a second straight day below the longer-term rising support line.


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

It is just a fraction of a point above the 50-day EMA and if the April low can hold, we can get rid of that blue dashed descending resistance line. Ideally for the bulls, a move above that resistance line would make an "official" downtrend moot.



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

Yesterday we talked about the Nasdaq, a market leader, and how Apple has been such a big influence on the index. Because of that, all eyes were on Apple's earnings report after the close yesterday and they did not disappoint. They beat estimates handily and the stock rallied nearly 8% in after hours trading.



That had an immediate impact on the the Nasdaq futures, which were up 1.4% after the report was announced. Should that hold into the open today (Wednesday) the Nasdaq could move back above the 50-day EMS and possibly close the open gap near 3000.


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

There's no guarantees that any strong open will hold. Stocks have been in a funk this month so seeing some selling into a rally to lock in some gains is a possibility. Where the indices close will be important.

The other leader, the Dow Transportation Index, gained over 1% yesterday taking it back above the 50 and 20-day EMA's.


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

This index has been bouncing wildly the last couple of months. Economic data, the price of oil, and the value of the dollar, have been having quite an impact, but whenever it trades above all the major EMA's, it's a positive sign.

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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