TSP Talk Blog

We had another turnaround Tuesday yesterday as stocks opened lower but bottomed just before noon ET, and rallied up to close at the highs of the day. The Dow gained 93-points. The big positive outside reversal day should lead to at least short-term follow-through gains, but it doesn't necessarily mean the downside is done.

I am on the road this week and as I have whined about before, I have a difficult time adjusting from my 4 large monitor setup in my office to a 15" laptop with a mini-mouse. Plus my internet connection is sluggish making the whole process frustrating and slower. So, I apologize, but I am going to make these market commentaries brief this week.

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The I-fund lagged but also closed well off its lows. We'll see if Europe reacts positively to the reversal in the U.S. markets. Bonds were up but they actually had a negative reversal day.

The SPY (S&P500 / C-fund) put in a major outside reversal day and we were likely oversold enough that some kind of snap-back rally was possible. But there is some resistance out there still, and if this turns out to be a head and shoulders breakdown, watch the neckline and the 50-day EMA to be possible roadblocks on the way back up.


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

The Dow Completion Index (S-fund) was breaking down big time early yesterday but that kind of extreme selling usually triggers some buying. It did close above the recent support line and the 20-day EMA crossing below the 50-day EMA tends to trigger oversold rallies, but this chart is far from out of trouble just yet. That small open gap could be an upside target should the rally continue, but it will have to get above the 50-day EMA to do that..


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

The Dow Transportation Index has been in a bear market for weeks now but it too was probably due for a relief rally. The 8400 area will be the place to watch for resistance as the descending trend line and the 50-day EMA currently meet at that level.


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

The EFA (EAFE index / I-fund) found support at the March low before rebounding. Again, an oversold rally is typical action and those overhead gaps look like potential targets, but a lot of damage has been done to this chart so the downside may not be over yet.


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

The dollar (UUP) broke above the resistance line but it posted a negative reversal day. Now that resistance may try to act as support. For the I-fund's sake, we'd want to see it fall back below that support line, or at least fall along the top of it.


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

China's Shanghai Index continues to struggle but remains above the important 200-day EMA.


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

The AGG (bonds / F-fund) rallied early, filled the open gap, then retreated. It broke above that 109 area we were watching, but it closed back below it. It looks a little bearish here but it is sitting atop of the 200-day EMA, which is the key area right now.


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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