TSP Talk Blog

Stocks were mixed on Friday but most of the major indices lost steam after the strong open. The Dow ended the day with a 14-point gain while small caps once again fell far behind.

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The I-fund was down just 0.11% but the EFA chart is showing more cracks that may be concerning. Bonds finally rallied and the F-fund picked up 0.21%.

The SPY (S&P 500 / C-fund) chart has a lot going on with it hitting a new intraday high on Friday, a rising wedge, a possible failed breakout, a rising inverted head and shoulders pattern that could breakout or pullback to test the middle of the head, and a negative reversal day. This should be an interesting week to see which of these formations takes over.


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

The weekly chart of the SPY chart remains in a strong rising channel and after breaking out in August, and has been consolidating for the last several weeks. We've talked about this before but I just wanted to remind you that the prior two similar weekly chart breakouts led to months of sideways consolidation.


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

The Wilshire 4500 (S-Fund) produced a negative outside reversal day on Friday, just after it hit the overhead resistance from the recent downtrend. The small caps are lagging badly but we don't know yet if that means they will drag down the rest of the market, or if the rest of the market indices will eventually pull the small caps up with them.


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

The Russell 2000 (small caps) chart is looking more ominous and fell back down below the 50-day EMA after one day above it. The last two pullbacks saw the 200-day EMA get tested and that may be where it is heading again.


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

The Dow Transportation Index hit a new intraday high on Friday before pulling back and closing near the lows of the day. It also shows a negative outside reversal day but it is now testing some new support created by the recent breakout.


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

The EFA (EAFE / I-fund) ... yes, another negative outside reversal day. It is sitting between the 50 and 200-day EMA's, both of which were recently tested and only temporarily broken. I assume one of these is going to break again and unfortunately the short and intermediate-term action may be leaning toward the 200-day EMA being the one.


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

The AGG (Bonds / F-fund) rebounded from some very oversold territory on Friday. There's not a lot of bullishness for bonds in this chart but there is room for a short-term relief rally. The bond bulls may be looking at this as a potential falling wedge that would break to the upside.


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


Posted daily at TSP Talk Market Commentary

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