View RSS Feed

TSP Talk Blog

The Omen

Rate this Entry

7/26/12

Stocks rallied early on Wednesday, but floundered late and we saw mixed results in the major indices by the close. The Dow gained 59-points while the S&P 500 and Nasdaq were down.

Daily TSP Funds Return





G-Fund: +0.004%
F-fund: +0.02%
C-fund: - 0.02%
S-fund: +0.24%
I-fund: - 0.22%
The S&P 500 is trying to hang onto the rising support line, and remember that old inverted head and shoulders pattern (in blue)? That neckline is still influencing the index as the 1335 area has been pretty good support so far. While the market is probably due for a relief rally, I'm afraid that the more the support is tested, the more likely it will eventually break.


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


The Dow has been getting consistent support at the 200-day EMA but again, if it keeps a knock'in [on support], eventually someone is going to let it in. Yesterday's rally initially made it up to the 20 and 50-day EMA's but it found resistance. Still, a attempt to move back to the top of the range is possible in these oversold conditions.


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


It's not shown on this chart since I've noted it several times in the past few days, but the Nasdaq completed the head and shoulders pattern and is now testing the neckline. I didn't want to crowd this chart with the H&S because I wanted to show the open gaps on the the Nasdaq. The question of course is, which gaps will get filled first?


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


We've talked many times in the past about an indicator called, "The Hindenburg Omen". I won't go over it in detail again but rather point those unfamiliar with it to some links that can help explain.

Hindenburg Omen

Hindenburg Omen as discussed on TSP Talk

Another Hindenburg Omen has been triggered and to sum it up, this indicator has a pretty good record of predicting market crashes when there is a market crash. Unfortunately it also gets triggered when no crash occurs. It seems to work best when it is triggered more than once in a short period of time. The current signal is the first this year.


Chart provided courtesy of www.sentimentrader.com

You can see that the returns are below average after the first signal, but far from seeing crashes once triggered. Just something to keep an eye on, especially if we see another Omen triggered in the coming weeks or months.

There is a strong positive bias in the market during late July and very early August, although last year at this time stocks were being pummeled so of course there are no guarantees.


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

Tom Crowley


Posted daily at TSP Talk Market Commentary


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.

Submit "The Omen" to Digg Submit "The Omen" to del.icio.us Submit "The Omen" to StumbleUpon Submit "The Omen" to Google

Comments

  1. DCRanger's Avatar
    Great analysis as always. Thanks
  2. tsptalk's Avatar
    Thanks, DC!

S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes