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Was that the pullback?

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4/26/12

Despite some weak economic data, Apple's earnings seemed to be enough to give stocks a boost yesterday as it helped the Nasdaq to a gain of 2.3%, while the S&P added 1.4%. Apple is not in the Dow and it gained 89-points or "just" 0.07%.



For the TSP,
the C-fund gained 1.38% yesterday, the S-fund was up 1.77%, the I-fund made 1.20%, and the F-fund (bonds) lost 0.05%.

The S&P 500 is not only back above the 20 and 50-day EMA, but it is now back within the longer-term rising trading channel. That 3 to 5 day rule of not acting on a breakdown paid off.


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

Last year the "sell in May and go away" axiom played out well as the yearly high was made on the first trading day in May. Next Tuesday is May 1st. The market rarely replays the past exactly, but I thought I'd throw that out there.

The blue dashed descending resistance line turned out to not materialize as it would have only been official if the April low had been taken out, and now that the S&P has broken above it, it may be the last we see of that line.



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

I have more charts than commentary from here down as I just wanted to show how all of the major indices are back above the 200, 50, and 20-day EMA's. That is certainly a good sign for the bull market, but of course one bad day and we could see everything move right back below the 20 and 50 as they are close at hand.



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


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


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

Should we sell in May and go away this year? I'll let the charts tell me, and as of today the technical picture makes selling a hard argument. If things head back down, we'll re-evaluate.

RevShark noted in yesterday's commentary that with earnings season winding down and most major companies having already reported, the market may be a little light on catalysts going forward (possibly why sell in May works). He said, ironically, the most positive catalyst might be weak economic data as it couple open the door for the Fed to implement a QE3 (quantitative easing).

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

Tom Crowley


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Updated 04-26-2012 at 09:20 AM by tsptalk (share prices corrected)

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Daily Market Commentary

Comments

  1. Sensei's Avatar
    Any significance in your opinion about the fact that the NASDAQ didn't fill the gap, but rather gapped the gap?
  2. tsptalk's Avatar
    I think the move up satifies the old open gap, but the new gap may need to get filled - but I think I better look into that 2nd part. The same thing happened in the 10-yr yield.
  3. pmcint01's Avatar
    I think your Fund Gains/Losses numbers are from yesterday.
  4. tsptalk's Avatar
    Thanks! The returns have been updated.
  5. Uptrend's Avatar
    Tom: On your first chart of the SP 500 you show that we are now back within the long term trading channel. For my channel work, I use TD Ameritrade Think or Swim software, and drew trend lines in the daily timeframe (They are supposed to be accurate and extend with time automatically). The sloping line drawn through the 1074.77 low on 10/04/11 and touching the momentum low of 1158.66 on 11/25/11 is currently above the market close today. The line rises with time, and so a backtest now to touch the line, tomorrow, would need to be close to 1417. Now a sloping line drawn through the momentum low of 1158.66 on 11/25/11 and touching the momentum low of 1358.59 on 4/10/12 has been overcome. The market is trapped between the two upward sloping lines. I suspect the difference may have to do with scaling and/or software?
  6. tsptalk's Avatar
    I'd really need to see a chart to understand, but one question I have is, is the chart you are viewing on TD Am. linear or logarithmic? The one above is linear.

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