Bulls not ready to give up
                         
Despite the slow start, stocks rallied again yesterday as the Dow gained another 51-points; keeping the recent trend intact.
                       
For the TSP, the C-fund was up 0.14% on Tuesday, the S-fund gained 0.33%, the I-fund jumped 0.96%, and the F-fund (bonds) fell 0.10%. 

The S&P 500 is pushing the higher end of the ascending trading channel. 

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

Apple opened sharply lower yesterday after the announcement that Steve Jobs will take an indefinite medical leave of absence.  Since Apple accounts for 21% of the Nasdaq 100, the index also opened sharply lower but buyers stepped up almost immediately taking the index into positive territory by the afternoon.

                              
After the close yesterday, we saw IBM and Apple report very strong earnings and both were up in after hours trading.  However, the index futures (S&P and Nasdaq) were not really doing much at all. 

There is a tendency to see a "sell the news" reaction during earnings season, particularly if the market had run up going into the reports as we have seen.  Today is the 12th trading day in January.

                                Chart provided courtesy of www.sentimentrader.com|

But will it be "different this time?"  Perhaps.

The dollar is flirting with the lower end of the recent trading range, temporarily breaking below it yesterday, but closing back within the range.  I know I am bringing this up almost every day, but the direction of the eventual breakout will have a large impact on the direction of the I-fund.

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

It looks like bond yields may break to the upside, if the recent bull flag has anything to say about it.  As we know, bond prices and the F-fund, move in the opposite direction of bond yields so a breakout to the upside in yields would be bearish for our F-fund.
                         
                        Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

What's interesting is that the dollar tends to move up as interest rates move up (or is it yields following the dollar?)  So if we see a breakout in bond yields, we might expect to see the dollar move higher as well, which would be bad for the F-fund and the I-fund.

Thanks for reading!  We'll see you tomorrow.

Tom Crowley