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Consolidation continues

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Stocks opened lower on Tuesday morning and chopped around most of the day As soon as buyers stepped in, the sellers pounced, but buyers were also interested once the sellers did their thing and the indices basically closed in the middle of their intraday trading range. The Dow lost 59-points on the day.

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The S&P 500 (C-fund) and small caps (S-fund) continue to trade in a tight sideways range and the bulls and the bears are each pushing to see who will win the breakout / breakdown battle.

As Inauguration Day nears, the concern on the street is that we could see a "sell the news" reaction after everyone bought the election results over the last several weeks. But you know how it goes when everyone expects something...



The SPY (S&P 500 / C-fund) slipped below the rising support line that started after the Election and was connected at the late December low. There is more support in the area just above 225 where the 20-day EMA meets with a shorter-term support line. Any break below there would likely be met with an eventual test of the 50-day EMA, but let's see if that support holds before we start looking at downside targets. The chart doesn't look bad.




The DWCPF (S-fund) came to rest on the 20-day EMA which has successfully held a handful of times since the early December peak. This chart formation does look bullish but if the bulls don't make a move the bears may take it as an opportunity to put more pressure on the sell side.




The Nasdaq Composite pulled back from its overhead rising resistance line. A test of the lower end of the channel could be in the cards, but that's not mandatory, of course. Depending on how you draw those support and resistance lines, we may be seeing a rising wedge forming as the support and resistance lines narrow.




The Dow Transportation lost over 1% yesterday but remains above the descending resistance line it broke above last week. It looks like the 9050 area may be a key area of support.





The EFA (I-fund) pulled back and may be retreating from a double top, and a rising wedge pattern. That large open gap still looms below.




I mentioned the London FTSE yesterday in our Plus report showing that it hit a 4-year resistance line last week. Yesterday it reversed course and posted a 1.46% loss but it sure seems like it needed a rest after the run it has had since early December.




The AGG (bonds / F-fund) posted a solid day and is hovering below some key resistance that we would expect to hold assuming bonds will remain in a bear market in early 2017.




Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the 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


The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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Comments

  1. Solotroop's Avatar
    If the President Elect is poised to initiate at up to 5 Executive Actions on inauguration day, where two are repeal of DACA and DAPA, what impact will this have on the Market in addition to where we stand now concerning the Market? I'd rather go straight to G-Fund if the smart folks are reading the Matrix. I simply can't, which is why I'm asking...S and C are hovering flat and slightly down the last several days.
  2. tsptalk's Avatar
    That's the question. Everyone expected the market to tank if Trump one so one thing we have learned is to expect the unexpected.

S&P 500 (C Fund)
S&P 500 INDEX,RTH (^GSPC)
DWCPF (S Fund)
Dow Jones U.S. Completion Total Stock Market Index (^DWCPF)
EFA (I Fund)
iShares MSCI EAFE Index (EFA)
AGG (F Fund)
iShares Lehman Aggregate Bond (AGG)
Source: https://finance.google.com/finance