TSP Talk Blog

Stocks were mixed on Wednesday with a little intraday volatility caused by the release of the Fed Meeting Minutes, but overall the indices traded in a fairly tight range and the VIX (Volatility Index) fell back below the 200-day EMA. The Dow lost 18-points while the S&P 500 was flat and the Nasdaq, Transportation Index, small caps, and international stocks were up.

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The Fed is leaning toward keeping the Fed Funds interest rate at virtually zero "for a longer time" because of slow wage growth and international turmoil. Stocks popped intraday on the news, as did bonds (F-fund) as bond yields gave back a chunk of the gains they had on Tuesday.

The SPY (S&P 500 / C-fund) closed slightly higher despite the S&P 500 falling a few cents, but basically both were flat. Volatility has calmed down as you can see the daily ranges on the candlesticks in the chart are getting smaller. That's what happened in late October into November as stocks rallied before the volatility picked up again in December prior to some choppy action.


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

The Wilshire 4500 (S-fund) made a new high yesterday as the small / mid-cap index has been leading the large caps this year.


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

The small caps of the Russell 2000 broke out this week after a four-month consolidation. Bull markets usually need the small caps involved to make it a broader rally. When only a few indices are making highs, it can be a more wobbly rally so the bulls would like to see all of the major indices involved.


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

The Dow Transportation Index, one of the (if not "the") market leaders, is one of the indices that has been lagging despite being up for 6 straight days. It is now up against resistance and this could be the green or red flag for the market going forward.


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

The EFA (EAFE Index / I-fund) continued its surprising 2015 rally moving above the November high and it has been breaking through resistance with very little opposition lately.


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

The dollar has been consolidating for a about a month after peaking in January. Should it fall below the support it is testing now, it could give a boost to the I-fund, provided stocks aren't selling off. A weak dollar usually translates into the I-fund outperforming the U.S. funds.


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

The AGG (Bonds / F-fund) bounced back strongly after the Fed Minutes were released on Wednesday.


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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