Wal-Mart was a the major drag on the Dow yesterday as they disappointed the Street with their earnings growth. The rest of the market seemed to use that as an excuse for some profit taking after the 6-day rally.
The VIX moved back above 20.0, and that's a red flag to some traders and investors so the dip buyers may sit back and see what happens before jumping right back in.
Administrative note: I have to apologize... I had written up the Tuesday market commentary and TSP Talk Plus premium report on Monday night (the night before, as I normally do) but sometimes in my haste to get it completed, I forget to do the important part - upload it to the servers. A few of our readers are on top of this and eventually send me an email to let me know that it is not posted, but usually it's fairly late by the time I see that and many of our readers may have checked and assumed there was no updated report. I am currently in the Pacific Time zone so I am waking up about the time the market opens (6:30 AM) to post Intrepid's Premium Report. If you do not see our free TSP Talk Market Commentary and / or a Plus Report by 6:00 AM (9 ET), there's probably been a problem with the upload, and since I always post something when the market is open, you can email me to let me know. tom at (@) tsptalk.com (edited for spam bots). Thanks!
The SPY (S&P 500 / C-fund) pulled back slightly on Tuesday, as we might expect after a negative reversal day to end last week. The 50-day EMA held on the pullback, as it did on the small caps chart, but other charts saw the rally fail at the 50-day EMA, so we're in an interesting situation. Which charts are telling the truth?
The small caps / S-fund also pulled back to the 50-day EMA. The problem here is that we had another negative reversal day on this chart as you can see by that long kangaroo tail that I circled.
The Transportation Index, considered the market leader, failed at the 50-day EMA and was down sharply on Tuesday. This looks like a bear flag breakdown and a prime candidate for a retest of the lows.
The EAFE Index / I-fund also failed at the 50-day EMA. Perhaps it just needs to go back and fill that small open gap below, but it could also be looking at a retest of the lows.
The High Yield Corporate Bond Fund failed at the 50-day EMA on its first attempt on Friday, then pulled back on Tuesday also creating a negative reversal candlestick formation.
The AGG (bonds / F-fund) went right back to the downside after its two-day pre-holiday reversal, but the downside seems to have resumed now that the holiday has passed.