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Market Comments

March 9, 2011

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Today's Commentary

The S&P is trying to fight the bear flag epidemic

Stocks rebounded off support once again as the major indices have been consolidating for two-weeks and can't seem to decide which way to break. The Dow gained 124-points on the day.

For the TSP, the C-fund gained 0.91% yesterday, the S-fund jumped 1.21%, the I-fund ticked up 0.02%, and the F-fund (bonds) lost 0.19%.

The S&P 500 is showing several possibilities to us. One is the bear flag that we have been worried about, which is very bearish. Looking out a little further, we see a triangle formation, which is a lot more bullish.



And I noticed that we could have a diamond pattern completed here, which is a bullish pattern as well...

                       Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
If you recall, the Dow Transportation Index saw a diamond pattern in late January / early February, and that index broke out strongly to the upside from that pattern.


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

Unfortunately, it now dealing with a big old bear flag that looks pretty ominous. There is also a bear flag on the other leader, the Nasdaq.


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

If there is a positive, all three indexes are still trading above their 20, 50, and 200-day EMA's, which seems surprising consider a two-week consolidation. But these bears flags are disturbing.

The dollar put in a reversal day on Monday and yesterday we saw some follow-through to the upside. It was due for a relief rally after moving down relentlessly for three week. It now faces some resistance here at 77, and again at 77.25.


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

Crude oil continued to consolidate as we get close to the important "Day of Rage" in Saudi Arabia on Friday. I believe this unrest is already priced into both the price of oil and the stock market, but of course any surprises could send things reeling.



We also have to deal with the actions of the unstable Gaddafi (pick one of a half dozen spellings)who still seems to be able to move our markets. I heard Jim Cramer say the market could rally 1000 points if Gaddafi stepped down. There's a lot going on.

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

Tom Crowley
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