What a way to open up the month of May with a 2% loss or more in most indexes!! Monday through Thursday was painful to watch and expensive to. Friday we got a little back, but it will take some work to get all that back. Didn’t we just see something like this recently? Oh yea, The beginning of April and the first two weeks sucked also. The thing that differed here is that it moved down so fast in such a short period of time. So what is ahead or better yet, what condition are the daily charts and what might lay ahead?
The pullback was dramatic but the overall daily chart looks healthy and that is what we want. We have a channel that we are basically centered in and the primary uptrend from the weekly chart is still intact. Friday it would have been nice to hold above that resistance line, but it slipped away and we close below. So from here we can trade sideways until May 16th and still stay in the channel. What we need to do is ease are way back above $1370 to create another higher pivot high and keep this trend going. What would help is for Crude Oil prices to continue slipping to below $95 a barrel or lower to help reduce the expense to bottom line of companies. If we want the stock market to go up, we need companies to report better earnings and you will get your wish. So basically, we look good here on the daily.
Where the daily chart was all peachy and good to go, when we zoom into the 30 minute chart, things do not look so rosy. We have fallen below the 5 and 10 moving average and we would not want to jump in at this point if we were outside looking in. But it appears the Thursday and Friday we started a transition to reverse the down trend to an uptrend. You always, and I mean always need higher highs and higher lows in order to create an uptrend. See the notes on the charts, PH an PL and you will see that that process has started. So things are starting to lookup, but more time and data is needed here to see which way this moment in time will go.
The Small Cap index looks almost identical to the S&P 500 charts but it took almost the greatest loss and it took it the quickest. At one point the Small Cap was down over 3% for the week and was looking pretty grim. The daily chart at the end of the week shows that we are still above the primary uptrend and if the reversal continues next week, we will have a new higher low by Monday or Tuesday. The 30 minute chart shows that by mid day Wednesday we started to settle down and found our bottom. The next two days we stayed in a trading zone and did not make any progress up or down. We are below the 5 an 10 day moving average and right on the 20, so going lower here and or breaking below $708.44 would be bad. So next week we stand on guard with this index and watch for faltering below $708 on the 30 minute and $706 on the daily.
The EFA or International index took it on the chin the mostest this week. I put that word there on purpose. On top of that it is at a cross roads of primary uptrend, immediate uptrend, and the 50 day moving average. I believe if it breaks below $61 and or the 50 day moving average that it will quickly test the $59 level that was set April 18th. So on the daily chart is sitting really close of upper resistance, close to trend lines, 50 day moving average, and close to the next major support. This is a difficult chart to read and anybody’s guess on direction next week. If we zoom into the 30 minute chart it appears that we may have found a bottom at $61.26 but this information is only 2 days worth of data, so more is needed. The most concerning thing is that price is below all moving averages and if that continues, then the turn down and a new trend is inevitable.
So can you guess our conclusion this week? Guarded! We have levels to watch and we need more data to make decisions. I have not made any changes in my TSP, even I was headed that way Friday. No matter your current levels are in the TSP, in or out, this is a time to watch an do nothing until something breaks in one direction or the other.
TSP Distribution: C-fund – 50%, S-fund - 50%
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