TSP Talk Blog

The Dow ended its streak of five consecutive triple digit point moves with a 42-point loss on Monday. It didn't begin that way as we were looking at a nearly 180-point loss just after the open, so the 42-point loss was actually a solid performance considering the start. Small caps nearly came back to break-even.

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The I-fund was the laggard and the chart is really damaged now, and a lot of that has to do with the strength in the dollar. Bonds were up and that rebound off the lows is now nearly two-week old.

The SPY (S&P 500 / C-fund) has been doing a good job of holding onto the 196 area and it looks similar to the prior market lows just before breakouts to the upside (blue boxes). I don't know how long we can count on everything eventually coming up roses, but while in a bull market we should anticipate a bullish outcome. The falling wedge (red) has got to break one way or the other soon. Falling wedges do tend to break to the upside, but that rising green support line may want to get tested first and if that happens, it would throw a wrench into the consolidation theory.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The Wilshire 4500 (S-Fund) did see the rising support get broken last week, but yesterday it tested and held above the 200-day EMA for a third straight time, and that's a positive sign. It's not out of the woods yet but as long as it remains above that 200 EMA, it's bullish.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The Russell 2000 (small caps) continues to hang on by a thread above the August lows. It is below the 200-day EMA but when we compare the current situation to the prior lows, we see that a consolidation just below the 200-day EMA has held. This needs to come to life soon and perhaps yesterday's positive reversal is the start.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The Dow Transportation Index has held up much better than the small caps and we're looking at the 50-day EMA for support here. Three tests have been successful but the 20-day EMA has been getting in the way of a move higher.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The EFA (EAFE / I-fund) broke down as the European markets followed the U.S. stocks down on Monday morning. Plus the dollar has been relentless in its move higher putting continued pressure on the I-fund. It may be due for some relief but avoiding the I-fund until it shows signs of recovering might be the safe bet.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The AGG (Bonds / F-fund) rallied again nearly filling a small open gap. Bonds will likely continue to rise until investors feel better about getting into stocks. A big upward reversal in stocks will likely come with a resumption to the downside in this AGG chart.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


We get the September jobs report on Friday. Estimates are looking for a gain of about 205,000 jobs and an unemployment rate of 6.1%. The jobs report contest has been started in the Forum.

Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and its TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php

Thanks for reading! We'll see you back here tomorrow.

Tom Crowley


Posted daily at TSP Talk Market Commentary

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