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Pullback contnued

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Stocks opened lower on Monday, and except for a brief push higher after 2PM ET, the bears had full control as the indices closed at or near their lows of the day. The Dow lost 83-points, and while the losses weren't severe, they were broad.

Daily TSP Funds Return

The I-fund lost just 0.09% thanks to a sharp decline in the dollar. Bonds were up.


The SPY (S&P500 / C-fund) closed for a third straight day below the 50-day EMA and the question is whether this is just another pullback that provides a buying opportunity for those who have been on the sidelines, or is it is different this time (from the prior pullbacks) and we will see something more severe?


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


A closer looks at the 50-day EMA breakdowns earlier this year shows there were no more than 4 closes below the 50-day EMA before the S&P 500 was able to recapture the EMA.



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


The
Wilshire 4500 (S-fund) was down Monday but it has held onto the 50-day EMA... so far.


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


I have posted this Head and Shoulders example chart many times over the years. The Dow Transportation Index is playing out this text book H&S breakdown right now...


The
Dow Transportation Index broke below the neckline in mid-May. Bounced back to retest the neckline last week but it failed and has now pulled back again. This economically sensitive index is normally the leader of our markets but it hasn't been that way for a few month, and the bulls are certainly hoping that divergence continues.


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


The
EFA (EAFE index / I-fund) was down slightly on Monday but the dollar reversed back down helping the I-fund out on Monday. The dollar was down over 1% on the day.


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


The AGG (bonds / F-fund) posted a small gain yesterday but couldn't even fill that small overhead gap. Probably oversold and due for relief, but this chart looks bad.


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



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


Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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Comments

  1. FireWeatherMet's Avatar
    (Dow Transports) "is normally the leader of our markets but it hasn't been that way for a few month, and the bulls are certainly hoping that divergence continues."

    What are the chances that it indeed is the leader...and its plummet over the past few months was leading the larger scale markets, which are now in delayed action starting to follow suit?

S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes