TSP Talk Blog

Stocks went on a wild ride on Tuesday, opening lower, surging higher, then closing at the lows. And all this in front of today's FOMC meeting and policy statement, which could also ignite fireworks. The Dow lost 112-points.

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The small chart above doesn't do justice to yesterday's action. Look at the Tuesday intraday chart of the Dow below. There were four different triple digit moves over the course of the day. I saw several folks making IFT's in the AutoTracker just before the noon deadline on Tuesday and so much happened after the deadline that I wonder if there were any regrets.



The losses weren't huge, but the volatility was. The I-fund was actually up as we saw 2% gains in several European markets yesterday, but they may pay the price today. Bonds were up.

The SPY (S&P 500 / C-fund) has now fallen to the bottom of the parallel channel using the neckline of the inverted head and shoulders pattern as the top, and the bottom of the left shoulder as the lower end.


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

There is an open gap down near 191 on the SPY but it wouldn't be "normal" for an inverted head and shoulders to fill that while forming the right shoulder. The other possibility, and not uncommon for the H&S patterns, is to see a rally back up to the neckline, and then another test of the middle of the head, which could fill that gap. It's never perfect, but these are the more common outcomes of H&S formations.


The Wilshire 4500 (S-fund) fell below the 200-day EMA - something it did not do while making the left shoulder. The parallel channel of the left shoulder is sitting near 990 if this inverted head and shoulder wants to be perfect.


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

The Nasdaq 100 (QQQ) filled one of its open gaps yesterday, and that cleans things up a bit There is another one all the way down below 95 that looks a little scary. That's near the 200-day EMA too.


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

The EFA (EAFE Index / I-fund) was up yesterday but there may be some payback today as European, which were up over 2% yesterday, and Asian markets may react negatively today to what happened in the U.S. market yesterday.


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

The AGG (Bonds / F-fund) bounced back from the possible failed breakout of the pennant formation. It looks like the December 1st high may be an important pivot point for the AGG.


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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