TSP Talk Blog

1/31/13

The market was trying to cling to the break-even level up until the Fed's FOMC meeting policy announcement. At that point the buying dried up a bit, and the Dow ended the day down a modest 44-points.

Daily TSP Funds Return G-Fund: 0.0043% F-fund: -0.06% C-fund: -0.37% S-fund: -0.74% I-fund: 0.29% More returns

The I-fund managed a gain because the drop in U.S. stocks came in the afternoon (while the Europe and the Far East markets were closed) and the dollar lost ground again.

We've become so spoiled by recent gains that the 0.39% loss yesterday felt like a pullback, when in fact the S&P 500 didn't even make a lower low, compared to Tuesday's action, and it still closed above 1500. This is after a GDP report that showed negative growth in the fourth quarter. I'd say investors were unfazed by the report, which is a little surprising.


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

Here's another tidbit of information from sentimenTrader.com: "If the S&P 500 manages to NOT lose more than -0.4% on Thursday, then it will have gone the entire month of January without a -0.4% decline. That would be the first time since November 1996, and only the 12th time since 1928. After the others, the S&P showed a gain the next month 55% of the time, and over the next six months 70% of the time. There was not a lot of consistency. The months were: Dec '49, Apr '57, Apr '63, Feb '64, Sep '64, Apr '65, Aug '65, Oct '65, Nov '68, Aug '93 and Nov '96."

A couple of the indices that were on fire and leading to the the upside, took the hardest hits yesterday. The Dow Transportation Index lost 1.5% after hitting that flat top.


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

... and the Russell 2000 also lost over 1%. There is potential support at yesterday's low, but the strong support is just above 880.


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

The Nasdaq and Nasdaq 100 indices were lagging all year but they actually held up well in yesterday's decline with the Naz 100 losing just 0.2%. That leads me to believe the selling yesterday had more to do with profit taking than the bears having their way.


Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The NYSE overbought / oversold has come well off of the overbought level and in a strong bull market, a neutral reading can be all that is needed to bring buyers back. So, in the next day or two we could find out if this was just a minor dip, or the start of something more serious.


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

February is not the best month historically but we are in a very strong bull market with many investors just waiting for an opportunity to buy, so we'll find out if this sideline cash can keep the bears from ruining the party.


Chart provided courtesy of www.sentimentrader.com

On Friday we get the January jobs report and the estimates are looking for a gain of 180,000 jobs and a 7.7% unemployment rate.

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

Tom Crowley


Posted daily at TSP Talk Market Commentary

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