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24/7 news keeping fear high After stocks in Tokyo were down 6% on Monday, U.S. stocks opened sharply lower, and despite a nice late day rally, we still saw losses across the board.  Incredibly, we are seeing the Nikkei down another nearly 12% as I write this on Monday night (Tuesday afternoon in Japan) and the U.S. futures are down sharply again (Dow futures are down about 250-points at 12:30 AM ET.) Looks like they are pricing in a worst case scenario.  For the TSP, the C-fund lost 0.60% yesterday, the S-fund dropped 0.58%, the I-fund fell 1.68%, and the F-fund (bonds) gained 0.23%. With Japan's markets freefalling, I don't know how much hope we can have that it won't continue to spill into our markets. The chart of the S&P 500 is trying to tell us a story but it is getting more complicated. We had what we are hoping was the "fake-out" breakdown from the triangle formation (bold red below) and many times these fake-outs turn into breakouts in the other direction. But those reversals tend to happen rather quickly so it we don't see a move at least back into the triangle by Wednesday, I think we can give up hope. We also have a new downtrend with the lower high and lower low now in place. We can't really tell which thin red line will be the lower end of the new descending trading channel.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The good news is that yesterday's late rally helped take the S&P back to the 50-day EMA at 1296. The bad news is, the leaders, the Nasdaq and Dow Transportation Index, are now both below their 50-day EMA's and have very ominous looking bear flags, which has already broken down on the Nasdaq.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The dollar found resistance at the top of its descending trading channel and its short-term rally may be over, but it is up Monday night. Unfortunately for the I-fund, the dollar isn't much of a help either way as the Nikkei Index has put in devastating losses over the last two days.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The
technical picture is not completely hopeless yet for the S&P 500, but the
damage to the leaders isn't painting a very good picture. As I said,
if we don't see some kind of relief rally by Wednesday, the S&P chart will
be officially broken for at least the short-term, and we may have to move
from a 'buy the dips' mind-set, to a 'sell the rallies' mind-set. like I did after the earthquake in Haiti, I set a fundraiser with MercyCorps for anyone looking for a way to help. Please go here for more information. Tom Crowley
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