Stocks were relatively flat on Friday as the Dow gained 13-points, and the S&P 500 and Nasdaq were down fractionally.  This week could get interesting with the EU  / Greece situation, the FOMC meeting on Tuesday, and a potential resolution to the long battle on healthcare.

For the TSP, the funds were mixed on Friday. The C-fund was down slightly at -0.02%, the S-fund was up slightly at +0.13%, and the I-fund jumped 0.70% after the dollar fell 0.6%.  The F-fund added 0.04%.  For more on last week's returns , please see our TSP Weekly Wrap-up. 

Also in the TSP Weekly Wrap-up, I talk more about the 2007 "rhyme", so I won't repeat it again today.

For the S&P 500 index, there are a few observations worth mentioning.  The main one is that it is facing a possible double top formation.  Double tops tend to produce short-term pullbacks, but if we look at the market leaders, as we will below, we will see that they did not take that double top break. 


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

Another observation is the declining trend in the PMO indicator.  We will have to see if the indicator can break that declining slope as it approaches resistance again.  The prior instances did produce at least short-term pullbacks - some more severe than others.
                      
The NYSE overbought / oversold indicator is overbought, and starting to head down from the extreme reading from earlier last week.  Markets do not always come down when overbought, but if you are looking to be a buyer, it can sometimes be beneficial to wait for at least a neutral reading before doing so.

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

As I mentioned above, the market leaders are leading in a big way to the upside.  I don't know why the S&P 500 would not follow, except if we see a downturn in these three leaders, which are very overbought, and are probably rising at unsustainable ascending angles. 

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

The dollar has completed a pullback to the lower end of the rising trading channel and could rebound from here, or it could test the 200-day EMA, or the other support areas. 

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

With momentum still on the upside, I would be looking for strong support near 78.5.  If that area can not hold, this bounce in the dollar could be over and the longer-term bear market may resume - but we're getting ahead of ourselves.  Right now the dollar, like the S&P 500 index, is in a "buy the dips" mode.

The TSP Talk Sentiment Survey came in at 56% bulls, and 31% bears for a 1.81 to 1 bulls to bears ratio.  That's the highest (most bullish) since mid-January, just prior to a large pullback - although that ratio was over 2 to 1 at the time.  The 1.81 to 1 ratio is just a neutral reading as far as the system - no sell signal yet.  The AAII Investor Sentiment Survey is also at a 1.8 to 1 bulls to bears ratio, with similar indications as our TSP Talk survey.

This could be a volatile week for Wall Street.  I will have one eye on the Fed, and another on the European markets on Tuesday, and later in the week we could get a vote in the House of Representatives on healthcare. 

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

Tom Crowley