TSP Talk Blog

03/25/13

Stocks rallied again on Friday as the recent back and forth - losses / gains continued for a 4th straight day. The Dow gained 91-points on Friday after dropping 90 on Thursday.

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The S&P 500 is riding the support of the 20-day EMA and this sideways action may be the consolidation needed to refuel it for another push higher. This chart looks like it wants to go higher from here, but a break of the 20-day EMA would create another lower low and that would make the chart more bearish.


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

As much as the above chart looks bullish, this longer-term chart gives me reason to be concerned. If the S&P 500 does make another push higher, we'd want to be on the lookout for a negative reversal day - the kind that produce tops like we saw several times over the last year.


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

Right now the 20-day EMA is holding for most of the major indices - obviously something you like to see in a bull market. Here's the Nasdaq...



... and here's the Dow Transportation Index.


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

So far so good for the bulls, but a break down of the EMA would likely trigger more selling.

The March seasonality chart gets more unfavorable as we get toward the end of the month. This may be due to the first quarter ending at the end of the month, but I'm not sure why. I would think that we'd see some window dressing buying from money managers to pad their quarterly reports, but that does not seem to be the case in March.


Chart provided courtesy of www.sentimentrader.com

That's all for now. I am following the Cyprus headlines closely as I believe it could potentially be the catalyst for the next black swan event that takes the S&P off of it's intermediate-term resistance line.

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

Tom Crowley


Posted daily at TSP Talk Market Commentary

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