TSP Talk Blog

6/19/12

Despite the strong futures action on Sunday night, stocks lost ground and opened sharply lower yesterday. But buyers stepped up quickly and the indices finish the day mixed with the Dow losing 25-points, the S&P gaining 2, and the Nasdaq picking up nearly 1%.

Daily TSP Funds Return G-Fund: +0.012% F-fund: +0.04% C-fund: +0.15% S-fund: +0.53% I-fund: - 0.16% More returns

The S&P 500 is still above the 50-day EMA and the breakout level of the inverted head and shoulders pattern, but I believe the next day or two will be the test to see if this holds. As we talked about last week, these inverted H&S patterns tend to move down to test the head first but rallying, but not always, and as we talked about yesterday, this week (post options week in June) is historically a struggle for stocks.


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

The Nasdaq had a good day yesterday and it is now testing the 50-day EMA. It is also testing an inverted H&S breakout.


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

The economically sensitive Dow Transportation Index had a big day yesterday gaining 2% and convincingly breaking above key resistance levels. Since this is the market leader, it bodes well for the rest of the market, but this index has been very volatile this year.


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

I wanted to see what the smart money was doing after this 3-day move higher and the OEX put/call ratio, which I consider the smart money, is well off the lows of the very bearish stance it had last month, at least the 10-day moving average is (middle graph), but take a look at yesterday's daily reading (bottom graph).


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

That is a one-day reading of 3.57, which is the 2nd most bearish daily reading of the year. Now daily readings don't normally mean all that much, but the most bearish daily reading of the year occurred in early May and marked the recent high peak for stocks, so it's something to think about.

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

Tom Crowley


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