TSP Talk Weekly Wrap Up – 6/23/2012

Last week was a bit of a roller coaster ride for the stock market as we saw strong gains early in the week, a big sell-off in the middle of the week, and another rally on Friday. Greece, Spain, economic data, and some bank downgrades helped shape the action.



Here are the TSP fund returns for the week of June 18 through June 22. 



As we talked about last week, we went into the week knowing that the week after options expiration had been down for the S&P 500 for 9 consecutive years. Now we can make that 10 years, but not by much. The 0.56% loss last week was all due to the large 2% plus decline we had on Thursday. 

The rally in the S&P 500 ran into some resistance at the April lows earlier in the week, and now the breakout from the inverted head and shoulders pattern may be in jeopardy as we saw a big pullback from that resistance.



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

The neckline of the inverted H&S and the 50-day EMA became resistance during Friday's rally, and until the S&P 500 gets back above that neckline, we have to worry about a test of the middle of the head. Remember this chart...



I didn't want to crowd the chart above too much so this chart shows 2 rising wedge patterns on the S&P 500, and the breakdown which is common in rising wedges. 


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


According to our friends at sentimenTrader.com: "The S&P 500 enjoyed an up day on Friday after more than a -2% loss the previous day, but Friday's gain came on the lowest volume in a month. Of the 7 other similar low-volume one-day bounces we've seen, 6 of them gave back the day's gains within 6 sessions (on average it took 3 days to give back the day's gain). Only 1 led to a runaway rally (April 8, 2009)."

With the S&P 500 breaking down from some key levels, namely the 50-day EMA, the neckline of the inverted H&S, the April lows, and the rising wedges, I think we need to stay a little cautious here and see how things go before thinking about buying this dip. That may mean we don't buy the bottom, but better safe than sorry. 

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.

Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
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The legal stuff: This information is for educational purposes only! This is not advice or are commendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

 

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