TSP Talk Blog

Stocks opened lower on Monday as we suspected, as investors sold-off the weak jobs report in the futures market on Good Friday, but as we expected - or hoped for - cooler heads prevailed and buyers stepped up. The Dow closed off its highs but still gained 118-points on the day.

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The I-fund led the way with a 1.09% gain as the dollar fell sharply again. Bonds were up slightly, but closed well off their highs.

Once investors thought about it, they realized that weak economic data has not been the bane of stocks in recent years, but rather the trigger to keep interest rates low. I know it seems backwards to want weak data, but we live in a world dependent on cheap easy money and liquidity now.

The SPY (S&P 500 / C-fund) broke above the short-term descending resistance line and it is back above the 20-day and 50-day EMA's, which sounds like a recipe for higher prices, but we've been fooled a few times in the last several weeks by double tops and failed breakouts, so it is tough to become too confident.


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

The Wilshire 4500 (S-fund) rallied and continued a march toward new highs. The large caps kept up the pace yesterday because of the weakness in the dollar. The recent strength in the dollar is what had small caps outperforming so we'll have to see if the small caps can keep up if the dollars declines.


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

As I mentioned yesterday, the Transportation Index may be the canary in the coal mine as its weakness is hard to ignore. Despite the rally in the broader market on Monday the Transports could not muster a gain and actually broke down below the 200-day EMA making a new 2015 low.


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

The EFA (EAFE Index / I-fund) gained over 1% with the help of the weak dollar, and the rising trend is still very much intact.


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

The dollar gapped lower and made a lower lower creating a new downtrend resistance line. The 50-day EMA is being tested now so we'll see what kind of strength this recent pullback has.


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

The AGG (Bonds / F-fund) was up slightly but could not hold up after stocks recovered and closed well off the highs. The wider rising trading channel is holding and it may attempt to move to new highs, but they depend on whether the positive reversal in stocks can continue or not.


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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