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Warnings Stocks had another bad day yesterday as the tone on Wall Street seems to be turning more sour.  The Dow fell 47-points and we are seeing some cracks in the charts. For the TSP, the C-fund fell 0.61% yesterday, the S-fund dropped 1.19%, the I-fund gained 0.31%, and the F-fund (bonds) added 0.20%.  The S&P 500 broke below its purple crayon support line.  It is now trading below the 20-day EMA, the neckline of its inverted head and shoulders pattern, and just slightly below the rising trendline connecting the prior lows.  All pretty good warning signs.                                                  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The 50-day EMA held on its first test but we have to be on the lookout for a test of the open gap near 1315 which has been open since mid-April.  Open gaps can almost act like a magnet for the index.  The good news is that the bottom of a gap can act as support. As we talked about yesterday, investor sentiment is fairly bearish, particularly for a market where the indices are just a few percentage points below a multi-year high.  Because of this I believe that, while we could see that gap get filled, I am optimistic that the market has enough ammunition (bears) to keep the market from correcting too much.  This low volume sell-off seems like an attempt for the smart money to shake out the weak hands.  If the open gap can not hold, I will rethink that optimistic view. The NYSE is just slightly oversold, but the Nasdaq has been hit a little harder and it is approaching the -500 oversold level.  You don't usually get too much lower than than in a bull market, unless we are in a more serious correction rather than a minor pullback.                           Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The bulls will be looking for a turn-around Tuesday today as support levels get a good test. Thanks for reading!  We'll see you back here tomorrow.   Click here to discuss today's Market Commentary Tom Crowley

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