TSP Talk Blog

07/25/13

Stocks opened higher yesterday, but sellers sold the gap up and we ended the day with a bit of a mixed bag. The Dow lost 25.50 points, the S&P 500 lost about 0.4%, but the Nasdaq was up slightly.

Daily TSP Funds Return G-Fund: +0.0057% F-fund: -0.31% C-fund: -0.38% S-fund: -0.71% I-fund: +0.32% More returns

As we mentioned yesterday, Apple's strong earnings report did help the Nasdaq as it was the only major U.S. stock index to close higher - but just barely. The 5% gain in Apple helped the Nasdaq 100 - the 100 largest U.S. tech stocks index - gain 0.3%.

The S&P 500 fell below the sharp rising support line yesterday, but it did just barely stay above the May high.


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

The market leading Dow Transportation index is now below both the rising support line and the May high, but because it is still above the 20-day EMA, there is no real reason for concern yet.


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

The small caps also fell below their rising support line, but we knew the ascending angle of incline was way too sharp to continue for too much longer. The question is, what kind of pullback will we get; benign or one that will leave a mark?


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

The other day I said we wanted to be on the lookout for some kind of shakeup; pointing to the negative outside reversal day we saw in many of the indices last May. The S&P 100 isn't an index we usually follow but it does contain the 100 largest U.S. company stocks. The reason I bring this chart up is because it actually did put in another negative outside day yesterday. Will this be the warning sign we were looking for, or just a one-chart wonder?


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

Yesterday I mentioned that the smart money was getting more defensive recently, but I said the 10-day moving average of the put / call ratio could curl up today because a one-day spike lower on daily chart from earlier this month would be coming off of the 10-day average...


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

Well, it did move up slightly, but yesterday's big one-day reading of 3.04 was enough to hold that moving moving average down quite a bit. So this indicator is still somewhat of a concern for stocks - although not quite extreme yet.

Bonds lost ground again yesterday and while we have seen some life in the bond market recently, I noticed in the longer-term weekly charts that they are not looking all that great. We clearly have a rounded top on the TLT (20+ year bond ETF) that may be tough to break through.


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

The AGG bond fund, which our F-fund follows pretty closely, is also showing what looks like a bear flag, which tend to eventually break to the downside.


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

The 20-day EMA crossed below the 50-day EMA a few weeks ago, which is bearish, but we could see a rally up to that 20-day EMA. Still, this isn't looking bullish for the F-fund looking out more than a few weeks.

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

Tom Crowley


Posted daily at TSP Talk Market Commentary

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