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| Today's Commentary |
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Rally - real or not? Stocks rallied strongly on Tuesday, breaking a 5-day losing streak for the Dow as the index rallied 104-points. Strong earnings reports from Wal-Mart and Home Depot put investors in a buying mood after the recent pullback.  For the TSP, the C-fund gained 1.25%, the S-fund jumped 1.71%, and the I-fund was up 0.88%. The F-fund (bonds) fell 0.21%. The indices continued the rally that started with Monday's positive reversal day, but some late selling took them off their highs, and there may be some concern that the 20, 50, and 200-day EMA's are going to act as resistance.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Volume was light, typical for an August summer day, and the question on the minds of investors now is, was this just a dead cat bounce from the sharp sell-off we saw last week, or has the market completed its pullback and is ready for another push higher? The NYSE overbought/oversold indicator has pushed back into the overbought side, but only modestly. It has formed an apex with the lower highs and higher lows, and something is going to have to give .  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The answer for stocks may come from the dollar. The dollar recently broke out above its descending trading channel, then pushed above the 200-day EMA. It hit the 50-day EMA and started to pull back again - typical technical analysis action.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk Yesterday's pullback nearly tested the 200-day EMA on the way down, but the dollar bounced off of it. It looks to be a bull flag formation and if it plays out like a typical bull flag, we could see a breakout out to the upside of the flag and at least test the 50-day EMA again. Stocks could easily inversely follow the lead. That is, if the dollar pulls back below the 200-day EMA, we could see stocks continue to rally. If the dollar breaks to the upside of the flag, then stocks could have trouble keeping yesterday's rally going. As I mentioned, I will be going under the knife this afternoon to take care of a blasted hernia, and hopefully I will be home by the early evening to at least update the AutoTracker, the share prices, and the premium services at some point. If all goes well I will update these commentary as well, but I'm sure it will be brief. I will also put out the sentiment survey on the home page a day early, just to cut down my work for tonight. Thanks for reading! Tom Crowley |