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| Today's Commentary |
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The rising wedge breaks Stocks plummeted yesterday as concerns over the economic recovery scare investors. The Dow lost 265-points. For the TSP, the C-fund gave up 2.77%, the S-fund tanked 3.55%, and the I-fund, gulp, lost 4.26%. The F-fund (bonds) added 0.21%. I don't know what kind of games are being played, but if you recall, I was surprised that stocks rallied the other day after the Financial Times reported that "The Federal Reserve is set to downgrade its assessment of US economic prospects when it meets on Tuesday to discuss ways to reboot the flagging recovery." After telling congress in 2009 that, "The Federal Reserve will not monetize the debt”, Bernanke told the world on Tuesday that they will do just that. The market was down sharply on Tuesday morning before the Fed policy statement, but somehow rallied after the Fed announcement. I scratched my head and tried to figure out why. After some speculation, the market seemed to finally seemed register the problem yesterday. The S&P 500 has now broken down from the rising wedge pattern and the June high resistance has held so far. The index is in danger of making a short-term lower low, and thus ending the recent uptrend. Caution remains warranted.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk I posted the chart below of the Dow Transports on August 5 to illustrate the double top pullback we might be seeing in the S&P 500 now, and the possible outcome. I am expecting a similar result - a possible pullback to at least the 200-day EMA.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk I'm on vacation for the next week so I will be cutting the commentaries short. Thanks for reading! I'll touch base again tomorrow. Tom Crowley |