TSP Talk Blog

11/21/12

The major indices were mixed yesterday, but the action was decent. The Dow lost 7-points on the day and most of the major indices closed very close to break even, but they overcame some large early afternoon losses.

Daily TSP Funds Return G-Fund: 0.0043% F-fund: -0.13% C-fund: 0.08% S-fund: 0.24% I-fund: 0.00% More returns

Ben Bernanke took the stage yesterday and for a while there he gave the market what I was looking for - a little scare that took the Dow down about 100-points, but by the close we saw the damage was repaired. Luckily for many TSP'ers, the Dow was peaking right about at our IFT deadline. If we saw that quick 100-point decline before the deadline many of us, that I called "weaker bulls" yesterday, may have gone running.

The S&P 500 seems to have put in another positive reversal day and, add to that, Tuesday's midday pullback found support near the 200-day EMA, and things look good heading into the stronger two-day holiday seasonal period.


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

The problem is, overhead resistance from the downtrend (yes, we're still in a downtrend) is not that far above where the S&P 500 is now. Only about 1%, which also about where the 50-day EMA is currently.

The Nasdaq is also facing some tricky resistance as the descending trend line meets the 200-day EMA. And let's not forget that the Nasdaq and the Russell 2000 (not shown) have large open gaps down below - possible post Thanksgiving targets.


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

Here's one of those good news, bad news situations: We've talked about the smart money put / call ratio (OEX) and how positive this reading is. But I noticed that when the dumb money indicator is free falling like it is now, the market gets a little bounce, but does not put in a low until maybe a week to a month or so later.


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

I have no idea if this bottoming "delay" will happen this time, but consistency of this delay is compelling and, who's to say this dumb money decline is even over? It hasn't curled up yet, although this is a 10-day moving average and it should start to head up after this recent rally.

Per sentimenTrader.com, the day prior to the Thanksgiving holiday has been positive 77% of the time since 1950 (thanks to a perfect record from 1965 - 1986). It has been positive 8 of the last 10 years. The day after the holiday has a similarly impressive historical record, though over the past decade it has been positive only 4 times.


Chart provided courtesy of www.sentimentrader.com

I'm a little concerned with what happens after this weekend. Enough to sell? Maybe. The Monday after this weekend has some historical issues, and the first half of December is not what the second half is historically. Perhaps taking some time off until mid-December is a good idea, especially considering the potential for a new low based on the dumb money put / call ratio we talked about above.


Chart provided courtesy of www.sentimentrader.com

I would like to see how the charts react to their overhead resistance, and that will be the dilemma. That is, whether to get out at resistance and hope you sold at the high, or wait and hope it breaks through?

Thanks for reading! Have a Happy Thanksgiving! I may or may not provide a brief commentary on Friday. Let's see if anything happens that's worth talking about. I assume there won't be much of an audience so it may just be updating the share prices and returns

Tom Crowley


Posted daily at TSP Talk Market Commentary

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