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TSP Weekly Wrap-Up – 04/28/12

The stock market got off to a slow start last week, but by Wednesday morning, after Apple had reported its strong earnings, the indices caught fire closing in positive territory for the second week in a row after the early April pullback.

It was all green for the TSP funds for the 2nd week in a row. The C-fund gained 1.83% last week, the S-fund was up 2.34%, the I-fund made 0.92%, while the F-fund (bonds) added 0.14% and the G-fund was up 0.04%.

For April, the C-fund is down 0.23%, the S-fund is back in positive territory at +.12%, the I-fund is still down 1.61%, the F-fund has gained 1.04%, and the G-fund has added 0.14%.

The S&P 500 has so far successfully tested the 50-day EMA (exponential moving average) – something we might expect in a bull market, although brief moves below the average had us concerned. The bear flags we have been watching on many indices last week, have all but disappeared.

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

The Dow Jones Industrial average has led to the upside and surprisingly, it is nearly back to the 2012 highs. Those old highs and the upper end of what appears to be a new rising trading channel, may give the Dow some trouble, but a break above them would be a very good sign for the stock fund.

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

The market leader, Dow Jones Transportation Index has been very erratic but in that chaos it is back above the 50-day EMA and a bullish inverted head and shoulders pattern has formed. These are continuation patterns, meaning in a bull market they should break to the upside, but if the chart was in a downtrend it could fail and break down.

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

The Transports have been in an intermediate-term uptrend, so that would be a good sign for the inverted H&S, but it has actually moves mostly sideways since about the middle of January. So, while the upside breakout looks good, and that is the way I would would guess it is going break, I won’t be overly surprised if it doesn’t. Oil is off the early April lows and could pose a threat to the Transports if it breaks out to the upside.

You can see that oil is testing a descending resistance line that could pull oil down again, or see it break out.

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

Things are looking bullish right now but with April coming to an end, we could start seeing some of the “Sell in May, and go away” action. Now that earnings season is over, about the only thing the market has left as a positive catalyst in the coming weeks / months is the possibility of an addition quantitative easing (QE 3), and ironically what will help that is weak economic data. That may be why last weeks’ weak data was met with some buying. There is an important Jobs Report this coming Friday so that could be the test. How will the market react to a weak or strong report? It could move contrary to what we would normally expect.

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

Tom Crowley
Weekly Wrap-Ups Archive
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