TSP Talk Blog

10/09/12

Stocks were mixed for a second day in a row after Friday's surprise jobs report. The Dow gained 35-points on Friday and lost 27 on Monday, but the S&P 500, Nasdaq, and small caps were each down on both days.

These TSP fund share prices are from Friday's close since we did not get updated share prices after Monday's federal holiday.

Daily TSP Funds Return G-Fund: 0.0036% F-fund: -0.18% C-fund: 0.00% S-fund: -0.07% I-fund: 1.04% More returns

Tuesday's share prices will reflect the results of both Monday and Tuesday's action.
You probably heard that we saw a strange jobs report on Friday. There were 114,000 jobs added in September, slightly below estimates, but the unemployment rate dropped from 8.1% to 7.8% after a big gain in jobs reported in the household survey.

The market opened sharply higher on Friday after the news but it spent the rest of the day giving back those gains, then we saw some sluggish light volume action on Monday, a holiday with most banks, and the bond market, closed.

The S&P 500 produced a negative reversal day on Friday and that usually precedes at least another day of declines, which we got yesterday. There is some support just below, but stronger support is closer to 1430.


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

The small caps of the Russell 2000 are in a triangle formation and Friday's rally could have been the fake out. Confirmation of that would come from a breakdown below the triangle. Not a great looking chart but until it breaks, support is still support.


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

The Dow Transportation Index has now made two attempts at moving back above the 200-day EMA - a level that it really hasn't had too many problems with - either while moving above, or below it. But it has been up for six consecutive days now and it may not have the strength to make the break. You can see below that the last couple of times we saw 6 to 7 day positive move, the index pulled back sharply.


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

I have been watching the Semiconductor index lately for clues to what the Nasdaq, one of the market leaders, might do. This chart is not looking very healthy as we could be witnessing a breakdown from a large bear flag, and this is after it had already produced a lower low and failed to breakout from a double top. The 375 area is obviously a key support level as, if broken, it would produce another lower low, and confirm a lower high.


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

Apple has been a big leader for the Nasdaq and the rest of the market. It has shown some recent signs of wear and looks to have broken down from a small head and shoulders pattern.


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

The uptrend is still very much intact so rumors of Apple's demise are greatly exaggerated, but a breakdown from an H&S pattern is a concern and how it handles any retest of the neckline on a rebound will be very important.

As I mentioned on Friday, the TSP Talk Sentiment Survey came in at 63% bulls, 26% bears, for a bulls to bears ratio of 2.42 to 1. That is a Sell Signal and that is the first sell signal since April, and only the 2nd week we saw a bull to bear ratio over 2.0 to 1. The survey system will moved to a 100% G fund allocation for this week.

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

Tom Crowley


Posted daily at TSP Talk Market Commentary

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