TSP Talk Blog

Stocks rallied early, but fell of the table in afternoon trading. Whether it s a coincidence, or as a direct result, stocks fell shortly after Carl Icahn warned that stocks are in danger of a large drop. The Dow was pinned to the +40 to +60 area most of the day, but the late sell-off saw it close up just 14-points, while the broader indices were hit much harder and it created negative outside reversal days on most major index charts.

The I-fund held up well since the sell-off in the U.S. market came so late.

Daily TSP Funds Return G-Fund: +0.0175% F-fund: +0.22% C-fund: -0.36% S-fund: -0.98% I-fund: +0.76% More returns

The S&P 500 (SPY) made a new high in early trading but the afternoon sell-off produced a negative outside reversal day. These are bearish, and fairly rare although we did see one in October that didn't amount to much more than an eventual dip to the 20-day EMA. When you see 2 or 3 within a short period of time, it can mean a major turning point is coming, but I've cried wolf enough this year so we'll just say this 2nd outside reversal day is what it is. Volume was not very high so that takes a little sting out of the reversal.


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

I'm going to sound like a broken record since these negative outside reversal bars showed up on almost every major index, but these patterns are concerning enough to point out each one.

The reversal on the Nasdaq took this tech heavy index below the recent breakout point and it ended the day down nearly 1%.


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

The small caps reversed downward after testing the October high and while not as damaged as the Nasdaq percentage-wise, the Russell 2000 did lose 0.7%.


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

Bonds were up again yesterday and both the long and intermediate-term bond funds moved above their newly filled gaps, showing some decent strength. The charts were looking bearish but were due for relief rallies. The question is, how much relief will they get?


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

If the market did sell-off on some big name investor's comments, it could be an emotional temporary reaction. But stocks have come a long way since the October lows and perhaps that kind of warning shook some of the complacency out of investors who are deciding it wouldn't be a bad idea to take some profits here.

In today's TSP Talk Plus report we look at a few more charts, plus the short-term indicators, and the VIX. 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.