TSP Talk Blog

Stocks opened higher on Monday, but quickly ran out of steam and headed lower all afternoon and into the close. The Dow lost 81-points, or 0.45%, and the talk is concern over lowered earnings estimates. The negative reversal patterns on the charts are very apparent, but volume was light so it probably wasn't the big money selling.

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The small caps outperformed the C and I-funds, and bonds were up.

The S&P 500 (C-fund) started to back down as it approached the overhead resistance, and we now have a negative reversal day on our hands. Volume was quite light so I don't think the big money is overly concerned yet. That doesn't mean we won't see a test of the lower end of the pennant formation, but buying the dips is still in play as the bull market is not showing signs of dying yet.


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

The negative reversal in the SPY is not usually a good sign for the short-term, but we did see a similar day last week that didn't turn out so bad.


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

The Wilshire 4500 (S-fund) remains in an uptrend despite the negative reversal day.


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

The Russell 2000 (small caps) has been the leader on this last push higher, but it hit a double top on Monday and backed down creating a potential failed breakout. Let's give it a few days before declaring it a failure.


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

The EFA (EAFE Index / I-fund) has a couple of open gaps below that may want to get filled but the bull flag may battle those gaps and try to push it higher first.


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

The AGG (Bonds / F-fund) was up on the losses in stocks, and we could say that it remains in a rising channel if we draw a line parallel to the resistance line from the March low. If it is going to remain in an uptrend, it would have to start rallying real soon.


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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