Stocks opened lower on Friday, climbed back in early trading, then drifted lower into the close. The Dow ended the day down 6-points and the large caps were all just slightly lower on the day. Small caps lagged and the I-fund had a good day after a sharp decline in the dollar.
| Daily TSP Funds Return
Earnings season has been a good one as expected, but stocks have been moving basically sideways, maybe slightly higher, for the last two weeks despite the great results. This week is one of the heaviest for earnings as we get a flood of reports from some of the major companies that can be market movers. I'm sure there will be a mix of exceptional reports that will send some stocks higher, while other come in fine but see some profit taking on the good news. Any earnings disappointments will likely be punished by investors, as we saw with Netflix, Amex, and eBay.
The geopolitical rumblings out of D.C. continue and that has investors somewhat hesitant, although with the indices still near all time highs, they don't seem overly concerned with the constant noise. Perhaps they've become numb to it.
The S&P 500 / C-fund has created a series of those F-flags and while they can move higher for some time, eventually they tend to dump, and the prior two did come down to fill open gaps. And what do you know... there's another open gap near 2765 waiting for this F-flag to break. Of course the market loves to humble those of us who think they know what is going to happen, so while my guess is we'll see some backing and filling in the coming weeks, I wouldn't be surprised by anything at this point.
The small caps (S-fund) chart looks particularly good with that clean cup and handle formation. Double tops tend to hold as resistance but triple tops are less stubborn. The question is whether it can break out, as C&H formations tend to do, if we do see some sell-the-news reactions to the larger company reports.
The Dow Transportation Index has been climbing quickly off the 200-day EMA low it tested just just last Monday, but there is a hint of a bear flag as opposed to a "V" bottom so it could be vulnerable unless it can move higher from here, above those resistance lines of the top of the bear flag(s).
The EAFE Index (I-fund) broke above a fairy major resistance line, with basically all of that gain a result of the 0.80% decline in the dollar on Friday. But here it is now testing the 50-day EMA again, which held as resistance on the last few test.
Here is that chart f the dollar showing the gap down decline, This is a longer-term chart and I pulled back to show a large F-flag. As we've talk about before, F-flag can move higher for a long time, but they eventually break down. I didn't market them but there are some large open gaps near 24.40 and just below 24.20.
AGG (Bonds / F-fund) broke below some support but it remains above the 200-day EMA which is almost always a key technical level. I still see that large open gap near 105.80 as a possible downside target it this can't breakout soon.
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