TSP Talk Blog

It was day two of a sell-off that began a couple of hours after the March jobs report was released. The Dow fell another 167-points, which was slightly worse than Friday's losses. The Nasdaq 100, which has really been hit hard lately, lost another 32-points or about 0.9%. That was nowhere near as bad as Friday's losses, but still no signs of life from buyers.

Daily TSP Funds Return More returns

The small caps continue to lag, losing another 1.68% yesterday. The I-fund held up well with the help of a modest pullback in the dollar. The F-fund benefitted with bonds being an option of safety for investors.

Just two days ago, the SPY (S&P 500 / C-fund) was making an all-time high. Now it finds itself clinging to the 50-day EMA and the old inverted head and shoulders pattern neckline support (red). It did break through the 20-day EMA and the rising support line (orange) yesterday, and those are warning signs.


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

The recent high in the S&P 500 created another negative divergence (blue arrows) in the PMO indicator as it produced a lower low on the indicator. The last time that happened, in January, it also led to a sell-off . That one lasted about two weeks before bottoming.

The weekly chart of the S&P 500 shows that there is a lot of room on the downside should this sell-off continue. The intermediate and longer term support lines are currently near 1800 and 1700 respectively.


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

The Nasdaq 100 has been the leader to the downside as the high flying tech stocks that led on the way up, are now dragging down that index with a vengeance. The rising trading channel (blue) broke on Friday, and yesterday the support line of the short-term downtrend (red) also gave way. This high volume sell-off will likely produce a strong snap back rally fairly soon, but the question will be whether to ride it, or sell it.


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

The Transports are also at a key spot hanging just above the 50-day EMA, but that open gap may be calling its name. This chart doesn't look too bad, but that failed breakout is not a good sign.


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

Bonds are within their trading ranges and the TLT is attempting to breakout again, after failing last month.


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


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

Tom Crowley


Posted daily at TSP Talk Market Commentary

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