TSP Talk Blog

Once again we saw a wildly mixed bag for stocks on Tuesday. The Dow lost a stiff 128-points (-0.7%) on the day but small caps and the Nasdaq were each up about 0.2%, and the other indices were somewhere in between the two. Oil was down again breaking to new lows and concerns about the recent strength in the dollar was likely the reason for the disparity in stocks.

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The S-fund led the way, the I-fund was down slightly, and bonds were up.

Volume was light in front of today's FOMC meeting, which wraps up with the policy statement being announced about 2 PM ET. Again the key thing everyone will be listening for is how they address interest rates and whether they continue to use the word "patient."

The SPY (S&P 500 / C-fund) posted an inside day which just means the day's highs and lows were within Monday's. That makes sense given the important FOMC meeting today. It seems the bulls nor the bears wanted to commit too much beforehand. The SPY fell below the 20-day EMA but has now closed above the 50-day EMA for two straight days. I'm looking for 3 to 5 closes above it before claiming it a break, and you might notice that the last breakdown below the 50-day EMA had only 3 closes below before it recaptured it.


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

The Wilshire 4500 (S-fund) is very close to new highs and if we were only looking at this chart to judge the market's strength we'd have to give it a thumb's up. Unfortunately not all indices look quite this good.


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

The Russell 2000 (small caps) did poke its head above the high made earlier this month. Another nice chart but a double top could trigger a small pullback, and with that gap still open you never know. But if the Fed is accommodating today, we will likely see a breakout.


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

The price of oil is down to new lows again so you should start paying less at the pump soon. The large cap stock indices are lagging this month since the we started to see oil fall below $50 again. The strength in the dollar is also a reason for oil and large caps to be lagging.


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

The EFA (EAFE Index / I-fund) is above the key moving averages, but there is a chance that we are looking at a bear flag, which would normally break down. The angle of incline may be the key as bear flags don't tend to rise quickly like this seems to be, and we saw a similar bear-flag-like formation to start the year, and that ended well for the I-fund.


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

Despite the AGG (Bonds) being slightly down yesterday, the TSP gave the F-fund a gain on the day. Today's FOMC meeting should help determine a direction for the F-fund.


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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