TSP Talk Blog

Stocks opened higher on Tuesday, but faded the rest of the morning before buyers showed up and slowly slid the indices back into into positive territory into the close. The Dow gained 24-points and volume was fairly light again.

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The dollar opened sharply higher putting a little bit of a damper on a good day by the European and Asian markets, and the I-fund ended up with a minor loss. Bonds broke down again.

The SPY (S&P500 / C-fund) was basically flat yesterday but it did fill that small gap left open on Monday. Buying low and selling high has been a good strategy recently since the market has not been trending so much as oscillating. It's not steep, but we can see a clear pattern of higher highs and higher lows so when is high high enough to sell? Should the trend continue it would be reasonable to suspect that the May highs could be taken out before the next pullback - although there have been some short-term trends where that hasn't been the case every time, but for the most part.


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

The Dow Completion Index (S-fund) made new highs and did not close its open gap as the SPY did. Again, this is bullish action but it has not been a straight path higher for stocks, so how high can it go before we see another dip? Those red lines are parallel.


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

The Dow Transportation Index was down slightly yesterday and as it nears the descending trend line and the major moving averages, the resistance may become too much. The index is in a bear market so expect a bearish result until it proves it can breakout above those levels.


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

The EFA (EAFE index / I-fund) was up modestly despite the European markets and the Nikkei having big days. It was the dollar that held it back. There are two large gaps that will have to be dealt with at some point.


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

In yesterday's commentary we were wondering if the dollar (UUP) was creating a bear flag or if the positive outside reversal day was going to be the start of a push upward. On Tuesday the dollar gapped open on the upside and had a big day. It is nearly testing the resistance of the 50-day EMA now so this is an interesting test for the dollar. Obviously filling that gap is a strong possible short-term outcome.


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

The German DAX had its second strong day in a row and it has now popped above the 50-day EMA. But it is now dealing with the fairly strong descending resistance line coming off the highs.


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

The AGG (bonds / F-fund) broke down from another bear flag and the lows from earlier this month look primed for a retest.


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


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