TSP Talk Blog
Pullback
by , 03-03-2014 at 08:15 PM (1887 Views)
Stocks saw their first significant down day since the market bottomed in early February. The good news yesterday was that stocks finished well off their lows - the Dow closed nearly 100-points off its low. The bad news is, we saw some breakdowns from many of the recent rising trading channels. The Dow lost 154-points.
Bonds closed higher as investors sought safety. Gold and other commodities also rallied despite a rebound in the dollar. The bounce in the dollar gave the I-fund some trouble, plus the Dow was down over 200-points when the European markets were closing, so we could see a bounce-back in the I-fund today if the U.S. markets stabilize at all.
Daily TSP Funds Return
The SPY (S&P 500) dipped below the old breakout point in early trading on Monday, but closed slightly above it. It did close below the bottom of its recent rising trading channel and that is a warning sign, but it is still above the 20 and 50-day EMAs and so I'd say we can give the benefit of the doubt to the bulls, but if those EMAs fail, then we could have a change coming.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps also broke their rising trading channel and the Russell 2000 also remain above its 20 and 50-day EMAs. It's hard to look at this chart and be too bearish, but I guess this is how peaks start so we'll have to wait and see.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq tested and held at the 20-day EMA and like the other indices, closed well off that daily low.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transportation Index, normally the leader, has been lagging and perhaps that has been a red flag warnings sign for us. It remains in a short-term uptrend where the support line held yesterday, along with the 50-day EMA. There's not much room below if that support is going to continue to hold.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar tried to fill that open gap from the bear flag breakdown on Friday. This chart looks bearish for the dollar, but the dollar always seems to have me leaning the wrong way. I'd like to see the gap get filled before the downside resumes - if it resumes.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds have been testing their recent highs and the IEF actually broke out yesterday. As I have been saying, bond traders have been on top of this Crimea, Ukraine crisis and the stock market has been lagging. Now that we see new highs in bonds, we'll see how serious the bond traders are about the severity of the crisis, that is if they will start to take some profits here.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Yields are down testing the prior lows and the question is whether we see a double bottom or a breakdown. A few months ago, not many folks would have thought yields would have been this low again.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Read more in today's TSP Talk Plus Report. We post more charts and indicators, plus discuss the Sentiment Survey Results and its 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.
Go to Profile
Mark as Read
