|
| Today's Commentary |
|
And, down again Stocks tumbled on Monday, taking away most of Friday's big gains. The Dow lost 141-points on the day. As I mentioned in the Weekly Wrap-Up, the last time the market rallied on a Fed's statement of 'we'll make it better', it gave back those gains pretty quickly. Friday's rally was an oversold rally, but it was triggered by the Fed's assurances that it 'do what it takes' to help, and those kind of rallies to tend to be short-lived. For the TSP, the C-fund lost 1.45% on Monday, the S-fund fell 1.92%, and the I-fund gave up 0.57%. The F-fund (bonds) rallied 0.36%. The S&P 500 did not open higher and fill the open gap on the chart, but sometimes those fills are "close enough" and that less than 2-point gap still showing may not need to get filled right away. The strength of the recent descending trend / trading channel surprised me as I thought we could see some follow-through upside action after Friday's big rally, and the overnight futures on Sunday night gave us no reason to believe we wouldn't see it, but by the time the market opened, the gains were gone and the short-term downtrend remained intact.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The five-day consolidation we have had since the big drop last Tuesday, is gaining strength for something big, but which way that something big will go, I don't know. We have seen several examples of both over the years - breakouts, and breakdowns - from this type consolation. In general, I would say the break would go in the direction of the longer-term trend, which is down, but we have indicators that would disagree.  We certainly have poor chart formations and that neckline of the H&S pattern (red horizontal line above) is still very much a concern if broken so it is tough to try to be a buyer - not to mention the Hindenburg Omen "crash" signals we've heard about. But we also have extremely bearish sentiment which is bullish and has consistently triggered at least short-term rallies in the past, and if that neckline does not break, could continue to provide support. I had showed you yesterday that Friday's rally took the overbought/oversold indicator back above the neutral line into overbought territory. In bear markets a neutral reading can be enough reason to sell. Yesterday's sell-off took it back down into slightly oversold territory. This is a pre-holiday week and many investors and traders are cleaning out their summer rentals and getting in one more week of fun in the sun. The action is likely to be unpredictable and volatile because of the light volume, so I am reluctant to make any direction calls just based on that.  Chart provided courtesy of www.sentimentrader.com
Here is the seasonality chart for September.
|
