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Early losses reversed

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Stocks opened sharply lower yesterday, but as we have seen many times, emotional Monday morning opens tend to reverse and fill the open gap. Once the indices recovered those losses, they did little else and most of them finished near the flat line or with small gains. The Dow added 18-points.
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The negative reaction on Friday to the jobs report and / or the situation in the Ukraine, rolled into the open yesterday, but buyers stepped up. although we're still seeing some stubborn resistance areas holding.

The SPY (S&P 500 / C-fund) fell down to the 20-day EMA before finding support and rebounding. Unfortunately, that 188+ area continues to hold as resistance with only a few closes above it since the first test in early March.


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


The Nasdaq 100 (QQQ) was able to close back above some key resistance after falling below it temporarily in early trading. If yesterday's low can hold and this can move above 88, we would be able to officially draw in that new support line (dashed now).


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


The Wilshire 4500 (S-fund) posted a positive reversal day but continues to struggle with recapturing the 50-day EMA. This still looks questionable, but one or two positive days above those levels of resistance could change that. As it is, it looks like a possible lower high in a down trend. There was a higher low made in late April so it is a reason for hope of a new rising trend to form.


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


The Transports are trying to hang onto the 20-day EMA. As long as it can stay above it, and particularly the 50-day EMA, this leading index looks OK.


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


Today is the 4th trading day in May, and here's a reminder that after the 3rd day, historically May gets rather negative on average. So the seasonality winds are blowing in the face of the market for the next few weeks and that could make things a bit more difficult.


Chart provided courtesy of www.sentimentrader.com

The dollar is flirting with new lows as we see a triple bottom forming here. Actually, if we pulled back a little further, we'd see a quadruple bottom, which is rare. This looks primed for an eventual breakdown and that might keep the I-fund in play since it tends to outperform when the dollar is dropping.


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


Bonds pulled back a little yesterday but both ETF's held above their old resistance lines.


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.

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