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| Today's Commentary (Short Term Outlook) |
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Bulls stay in control
for now Despite a dull struggle for most of the day, stocks closed strongly and ended the day with modest gains near the highs of the day. The Dow added another 40-points. For the TSP, the C-fund was up 0.45%, the S-fund gained 0.65%, and the I-fund lagged picking up 0.21%. The F-fund was down 0.27% as bonds are starting to struggle and are looking "toppy". I'm not sure how long it will last, but the bulls remain in control for now. The recent strength off of the bear flag is a surprise to me, and while we are seeing some technical positives, the market is getting quite overbought, and the test may come when the indices come off of their overbought levels. Will they break down, or just consolidate? The S&P 500 moved above the 50-day EMA, which is great, but I like to wait for 3 closes above the EMA before celebrating. The fact that the 50-day EMA is still above the 200-day EMA is bullish, but the 20-day EMA remains below the 50-day EMA for now, and this is a little bit of a warning. No red flags are waving yet - but it is a warning.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The Dow Transportation Index was also up modestly yesterday, and also closed above the 50-day EMA for the first time since mid-January, but the old ascending support line could start to act as resistance. At least it is moving upward.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The EFA, which is basically our I-fund, doesn't look quite as good, as we have seen a lower low and the bear flag is quite obvious. It seems to be having hard time getting above 58, and we may have to worry about that being an intermediate to longer-term top. Yesterday's early strength met with resistance at the 20-day EMA, right about the time the dollar started to rally.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The dollar plays a big role in the action of the I-fund, even more so than the influence it has had on the U.S. stock funds, and since December's low, the dollar has been in a strong bull market. It appears poised to breakout of another bull flag.  The AGG is a good indicator of our bond fund (F-fund). It seems to be putting in a double top and is currently finding support at the 50-day EMA, but if that fails it should quickly test the rising support lines. It is still in a bull market, but that double top looks troubling.
On tap today is the Producer Price Index (PPI) report, and the initial
and continued jobless claims. |
