TSP Talk Blog

Stocks continued their recent trend of fading the open. After a strong pop higher at the open yesterday, stocks drifted lower for the rest of the day, holding onto just modest gains. The early 150-point gain in the Dow turned into 60-points by the close.



For the TSP, the C-fund was up 0.35% yesterday, the S-fund gained 0.23%, the I-fund jumped 1.56%, and the F-fund (bonds) added 0.05%.

Despite some wide intraday swings, the S&P 500 has closed within a very tight 5+ point range during the last 5 trading days. That's not a terrible thing for an index that has been up 14 of the last 18 trading days. It is doing a little digesting of those gains.


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

It is now testing the bottom of its recent ascending trading channel (red), although the support here isn't all that strong. We could see that support hold and bounce back toward the middle of that trading channel, and even back to the top, but considering the extending indicators, a pullback would not be a surprise. I would expect any pullback to at least touch the 20-day EMA, which is also rising rather quickly, but that would be another level of support for this new bull market.

Most of the action (gains and losses) in the market has been coming while the market is closed lately, making it tough for traders to do much during the day. This shows up most prominently in the chart of the Nasdaq as the gaps are more easily seen.


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

I see four potential gaps that could be targets to be filled on any pullback, but the large open gap near the November low will probably stay open for a quite a while. Perhaps a summer swoon will take care of that later this year.

The bond traders are still showing no signs of giving up on bonds as the yields have been unable to stay above 2%. We did have a little uptrend starting off of the December 19th low, but that broke late last week. This isn't a great sign for the stock market.


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

Remember, bond prices and the F-fund go up when yields go down.

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

Tom Crowley


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