TSP Talk Blog

7/05/12

Stocks rallied again on Tuesday as the Dow gained 72-points in the shortened pre-holiday trading.

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The gain in the S&P 500 kept it above the resistance / turn support, line we have been watching for a 3rd straight day. It's good sign but not surprisingly, the market has become very overbought.


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

The NYSE overbought / oversold indicator is hitting the +1000 level, and while that does not always mean stocks are going to head back down, it can cause a pause in the upward action.


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

As we have seen many times, pre-holiday trading can be reversed in post-holiday trading, but I don't think these next couple of days will be considered post-holiday. That will be after the weekend. The days following the 4th of July are not as historically strong as the pre-holiday trading, it is still positive.


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

Whenever the market rallies into earnings season, there is a better chance of seeing a "sell the news" reaction when the earnings start to roll out. This year's earnings season kicks off next Tuesday with Alcoa, but it won't be until later in the week and into the following week that we start to get the big names that can move the market.

You can see by the July seasonality chart that things dicey as we get into the 3rd week of July.


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

Volume should be light the rest of the week but we will still get the June jobs report on Friday. Light volume can have the ability to really push the market indices - whether up or down, so this report may have that kind of impact if there are any surprises.

The current estimates are looking for a gain of 100,000 jobs and an unemployment rate of 8.2%.

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

Tom Crowley


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