TSP Talk Blog

Stocks posted another positive day with gains across the board and the Dow adding another 76-points. The indices did close off their morning highs and the charts do have possible negative reversal patterns, but the bears were unable to put any pressure on after that.

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The I-fund led on the upside but many of the European stock market charts are up against resistance. Bonds (F-fund) were up.

The S&P 500 (C-fund) went above 2000 for the first time while the SPY pushed above 200 . They didn't close above those milestone levels, but they did remain in the steep rising trading channel (blue). Things are obviously a little stretch to the upside in the short-term and there may be some resistance in this area (red).


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

The Wilshire 4500 (S-fund) had a nice day but we'll have to see if the bears try to take advantage of the small kangaroo tail reversal pattern created yesterday.


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

The EFA (I-fund) moved above the 50-day EMA temporarily yesterday, but closed just below it. There is a rising wedge pattern that looks primed for a breakdown if the resistance from the 50-day EMA continues to hold. And that analysis comes from the charts of the European markets that are hitting resistance hard right now.


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

The German DAX hit the 200-day EMA and stopped there, but it did close at the highs of the day. A test of the 50-day EMA wouldn't be out of the question but if this does turn out to be the start of a bear market in the DAX (it's already had an official correction) the 200-day EMA could be tough to recapture.


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

The French CAC and the London FTSE (neither shown here) are in similar situations hitting resistance. If the resistance can be broken, perhaps the correction in the International Fund is over. If not, there could be another leg lower starting very soon.

Bonds and the F-fund were up modestly yesterday as this chart (and the AGG) continue to look bullish for bonds. We know why (economic concerns) but why aren't stocks worried?


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


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

Tom Crowley


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