TSP Talk Blog

Stocks started out slowly on Friday but a deal to extend Greece's bail-out for another 4-months gave a boost to the market. It's a temporary fix so we'll be dealing with this again before the summer starts. Oil continues to hold at $50 - a level that seems to keep the stock market bears away. The Dow gained a solid 155-points while the broader indices saw similar gains in the +0.6% to +0.8% range.

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The I-fund continues to outperform this year, doubling the weekly gain of the number two fund last week, the S-fund. Bonds continue to be sold in favor of stocks.



This year the TSP stock funds are flip-flopping last year's action when the C-fund led the way and the I-fund lagged badly.

The SPY (S&P 500 / C-fund) posted a positive outside reversal day on Friday and reached new all-time highs. The current pattern looks quite similar to the action we saw in early November after the S&P broke out above the October highs (blue boxes.) If that's the case we could see another push higher before the end of the week.


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

The Wilshire 4500 (S-fund) has been making new highs daily and it is now trying to use the old resistance line as support.


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

The Dow Transportation Index gave us a scare on Thursday when it created a negative reversal day, and true to form, the negative reversal was followed by a sharp decline in early trading on Friday. But by the close it reversed back to the upside and moved back above the descending resistance line. The new "kangaroo tail" is positive and that probably means at least some intraday upside follow-through today (Monday.)


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

Oil has been chopping back and forth since it broke above the $50 mark earlier this month. I know the situation in Greece has been a catalyst for stocks, but it would be interesting to see just how important that $50 level is to the stock market, should oil fall below it. Is it just a coincidence that stocks were falling when oil went below $50 in January and have rallied back strongly since oil has been back above $50?


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

The EFA (EAFE Index / I-fund) continues to lead in 2015. It was the lagging fund in 2014 so perhaps it is playing catch-up. As long as this remains in the rising trading channel things are good, but a pullback and test of the 200-day EMA is certainly a possibility after a move like the one we've seen since the early January low.


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

The dollar (UUP) filled the small overhead open gap on Friday, before pulling back down again. This could be a flag pattern that will resolve upward. However, if support and 20-day EMA give out the dollar could be peaking and if that becomes the case, the I-fund may put it into another gear and keep moving higher.


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

The VIX ("fear gauge") is down to 14.30 and below the 200-day EMA. That's a good sign. Fear is down but it's also not showing excessive complacency either. If we start seeing 12 and lower again, that would get my attention.


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

The AGG (Bonds / F-fund) is looking weak after the steep pullback. It's having a difficult time getting back above the 50-day EMA and now there's a big bear flag being created. There is a double dose of support near 110 that may get tested this week.


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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