TSP Talk Blog

Turnaround Tuesday was followed by Wild Wednesday and the indices revisited Tuesday's lows. Some fell below those lows, and some held. The Dow lost 268-points, something we have not seen in a while, and small caps lost 2%. Oil continues to tumble on global economic concerns.

Daily TSP Funds Return More returns

The I-fund was down "just" 0.78% but as I write this Wednesday night, Japan's Nikkei is down nearly 2% so the I-fund may pay a price with today's share price. The F-fund was up as investors opted for bonds.

The SPY (S&P 500 / C-fund) has broken down with three closes below the neckline resistance we have watched for weeks, so perhaps the right shoulder of the inverted head and shoulders is finally forming. You can see that the blue boxes are still very similar and a pullback is upon us, but I don't expect to see the same carnage that we saw in October.


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

The Wilshire 4500 (S-fund) was hit hard yesterday and fell below that dashed support line we have been watching, and it now sits just below the 50-day EMA.


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

The Nasdaq is still well above the 50-day EMA but I posted this chart just to show that when volatility picks up, like we see in the red boxes below, that's when the market gets vulnerable. Sometimes it creates a nice buying opportunity, but sometimes things fall apart like they did in September / October - and the volatility was the canary in the coal mine.


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

With the price of oil sinking you might expect the Dow Transportation Index to hold up, but the Transports were down 1.35% yesterday. That was better than the other indices but it's still a big loss for an industry that welcomes lower fuel prices. The 50-day EMA is being tested now but we now see a lower high and a lower low, which spells downtrend.


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

And here's the continued slide in the price of oil. It was down another 3.2% yesterday and is now down over 40% from this year's highs. It could be an increase in supply, but the signs of weakening global economic numbers seem to be indicating that demand is going to decline.


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

The EFA (EAFE Index / I-fund) closed for a third straight day below the 50-day EMA. The 50-day EMA is still below the 200-day EMA, and we have a possible new lower high in the long-term trend. I know it didn't feel like it a couple of weeks ago, but the I-fund is still in a bear market.


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

The AGG (Bonds / F-fund) got help from the sell-off in stocks as investors moved to bonds. The rising support and falling resistance sets up an apex that may mean some back and forth until a breakout or breakdown, but right now it's hard to say which way that will be.


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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