TSP Talk Blog

Stocks fell on Thursday and the Dow had another triple digit loss. As opposed to Wednesday's action, this time we saw the losses in the broader indices also take the hit. The I-fund led helped by a drop in the dollar, and bonds rallied on the weakness in stocks.

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I got home Thursday evening after traveling all day, so just one more brief commentary, but I should be back on my normal schedule starting today. Thanks again for your patience.

The SPY (S&P 500 / C-fund) fell through the old resistance line intraday yesterday but managed to close above it. Will the recent breakout from the rising wedge prove to be a fake-out, or will the support hold and provide the launching pad for another leg higher? There have been 6 closes above the breakout level so that helped, but clearly it is flirting with danger. The gap remains open near 190.50 and it is probably just a matter of time before it gets filled. It could be days or months, but clearly it wasn't sooner rather than later, like we typically see.


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

The Transportation Index fell through a couple of levels of support and, being a leading index, may unfortunately be a look at what is in store for the follower indices. There is support near 7950, and the 50-day EMA is currently 7848.


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

The QQQ (Nasdaq 100) is just a day off of a new intraday high so yesterday's action isn't overly concerning yet. A move to 91 would test the breakout point, but there is an open gap below that level. If things get worse, the intermediate-term support line is rising and currently near 89.50.


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

The small caps of the Russell 2000 nearly filled its open gap yesterday and it will be good to get that out of the way, but the next tests will be the top and bottom of the rising wedge. Otherwise, we may just resume a possible new rising trading channel.


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

Bonds continue to hold and rebounded off of the 50-day EMA. That makes sense since stocks fell, but support did fail so they are not out of the woods yet.


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


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Thanks for reading! Have a great weekend!

Tom Crowley


Posted daily at TSP Talk Market Commentary

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