TSP Talk Blog

Stocks opened higher again again on Friday, but as we have seen often over the last couple of weeks, early gains are having a difficult time holding. There was some tentativeness heading into the long holiday weekend, and with Greece's referendum pending, and some potential homeland holiday threats reported, you can understand why. The Dow lost 28-points, while small caps were down more sharply, and international stocks we up slightly.

Daily TSP Funds Return More returns

I am having to write most of this on Saturday because I will be traveling on Sunday. I don't know exactly when the Greek referendum results will be in, nor do I know how the markets will react to a "Nai" (Yes) or "Oxi" (No) vote. I suspect the "Yes" vote would be more bullish for stocks since it means the Greeks would accept the terms of a new debt deal, but Prime Minister Tsipras is pushing for a "No" vote believing he can get a better deal than the current one on the table. The IMF has stated otherwise. What a mess.

Update: I just arrived in my hotel and see that the Greeks did in fact vote "No" and as a result the futures are down sharply (over 1%). Another emotion gap on a Monday morning.

If you just looked at Friday's 5.3% unemployment number, it would appear that the June Jobs report was a good one, but the number of jobs created was a little light, and they made negative revisions to April and May's figures. The number of American's in the job market dipped again as the participation rate hit a 37 year low. The good news for the stock market is that the mediocre data may keep the Fed from considering any rate hikes in 2015.

2nd quarter earnings reports will start rolling out in the days and weeks ahead giving the market another catalyst.

The SPY (S&P500 / C-fund) fell below the support line of the rising trading channel last week. It moved back in intraday twice, but it has now closed below it for 4-straight days. We now have what could be a "V" bottom forming, or it could be a bear flag - and with what the futures are showing, we could be seeing the bear flag breaking down already. In the small cap chart below the bear flag seems more apparent.


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

The Dow Completion Index (S-fund) has bear flag written all over it, and it has now closed below the 50-day EMA for 5-straight days. It needs some help, quickly.


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

The Dow Transportation Index has been broken for weeks now and I don't see anything in the chart that has me believe it is ready to turn around. The big question we've been asking for weeks is, how long can the broader market hold up with the Transports in a bear market?


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

The EFA (EAFE index / I-fund) opened a large gap last Monday, and depending on what happens in Greece on Sunday (I'm writing this on Saturday) we could easily get another gap. However, the direction of that gap remains a mystery (Not anymore. It should be down). Right now we're looking at a bearish flag that is trying to hold above the 200-day EMA.


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

The UUP (dollar) has been rallying for a couple of weeks, but the larger trend remains down since the peak in March. The gaps are mostly filled now although there are a couple that aren't official yet. (Update: The "No" vote sent the dollar up sharply.)


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

The China watch shows the Shanghai Index falling sharply again on Friday and at the lows on Friday it was down 30% from the June 12th peak. The 200-day EMA is there to try to hold it up. Can it get a relief rally from here? If not, look for the U.S. indices to start to react to this troubling situation.


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

The AGG (bonds / F-fund) is running into some strong resistance, but the possible double bottom has held so far. In order for that to be official, the AGG would probably have to move above 109, which would make a higher high and take out that resistance.


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

Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php
Thanks for reading! We'll see you back here tomorrow.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.