Weekly update 7/9/2010

What a crazy market to trade in and what a crazy market to read. One minute it is all doom and gloom and the next we are in a big rally. Makes you wonder who is pulling the strings on the trading floor. The S&P 500 was looking pretty down in the mouth when it closed a week ago, but the last 5 days it made a nice run up. We were up 5% in a week but we still closed below the 50 week ma and we are still below 50 on the RSI. A down trend established is a down trend until it is reversed. Next week is going to go big one way or the other because it is the beginning of the quarterly earning reports. It is really hard to read the tone of what is going to happen, but if you want to bet, now is the time to bet. ALCOA (AA) will be the first to report next week and will set the tone for the week. Rumor is, that they will meet or disappoint on what is expected. Back to our index the SPY, it made it back above the support point of 104.58, but the move was not enough to make me want to get back into the C-fund. Looking at the 50 week ma and the closing price this week, it will be a minimum of 2 weeks before I could expect to get back into the C-fund at best.

The Small Cap index or $DWCPF was looking as if I was going to have to close my position as of Monday and Tuesday this week, but it made a nice 5% jump by the end of the week to stop that decision. It managed to straddle the 50 week ma and stay above the first major support point of 492.05. The RSI also squeaked its way back above 50, but I would not be dancing at a 50.2 cross over. The Small Cap is still technically in a down trend established by the lower pivot high created a week ago. Even though there is a few things to smile about here, it is something that still needs to be watched and monitored.

I think the most dramatic move this week had to be the EFA or European index. It by far has suffered the most this year and not shown many signs of life. The first thing I notice is that it created another pivot low which is within a half of a point of the one established 5 weeks ago. This is starting to look like a base, 45.85 to 46.45. The next item is the closing price for the week, closed above the first major support line but still below the 50 week ma. The last point of interest is that the RSI made a lower high which is good, but the RSI is still below 50. There is momentum here, but the question is will it be strong enough to continue next week and beyond. I have my doubts, but it will be interesting to watch this fund next week to see if it can break out.

So even though the week was good for the markets, it was not enough to swing us into an uptrend. This will be another week where we watch and wait for a trend to develop.

TSP distribution: F-fund – 50%, S-fund 30%, G-fund 20%