TSP Talk Blog

It was a mixed day for stocks on Friday as the sell-off in oil impacted the large cap indices like the Dow, down 141-points, and the S&P 500, which lost -0.55%. But the Nasdaq, and for the most part small caps, were spared.

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The post QE announcement trading led to further upside in the European markets and that kept the I-fund afloat but the U.S. indices started to decline in late trading and that pulled the EFA down so the I-fund could pay a bigger price with today's price.

The SPY (S&P 500 / C-fund) has been forming the right shoulder on the 6-month long inverted head and shoulders pattern. The chart looks bullish but it really needs to breakout to the upside and get it over with or it runs the risk of failing and testing the middle of the head of the H&S, and we know that open gap still sits down near 190.


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

The weekly chart is still rising steadily and so far support has held up during this January pullback. If there's anything negative to report, it would be what looks like a possible bear flag forming.


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

The Wilshire 4500 (S-fund) needs to breakout above that resistance line. The formation is bullish, whether we look at it as the right shoulder of an inverted H&S, or a cup and handle formation. But until it breaks out there's always the chance of another test of the rising support line.


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

The EFA (EAFE Index / I-fund) was down on Friday despite gains throughout Europe. This was playing off of the weakness in the U.S. indices late Friday. It has had a nice run but it's in a bear market and nearing resistance so until this breakout, I have to lean on the side of believing this is going to roll over again.


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

The dollar has been going parabolic lately and with the QE in Europe, it had another reason to continue higher. This may be the story instead of what everyone is talking about, which is the price of oil falling.


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

Clearly the dollar is having the largest impact on the price of oil rather than the other reasons being thrown out there by everybody, including me.


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

The AGG (Bonds / F-fund) has been pulling back the last week but that looks like a big bull flag ready to break to the upside. Why bond yields would be dropping further and bond prices are still rising is a mystery to me. We keep hearing that the economy is strengthening, but that does not translate to bond yields being under 2%.


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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