TSP Talk Blog

China bounced back on Thursday and that helped the U.S markets to open sharply higher on Thursday morning, but the Dow's gains of 250-points faded into the close and ended the day up just 33-points. We're seeing some bearish action in the markets but it is still up in the air if this is leading to something more serious, or if this is just another pullback that needs to be bought.

Optimism of a deal for Greece has the futures up sharply again on Thursday night. Will the gains last this time?

I am still on the road but should be back in the office by Monday. Thanks for your patience with brief commentaries and slower responses to emails / messages while I have been gone.

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The I-fund led while bonds were down.

The SPY (S&P500 / C-fund) looked great in the morning on Thursday, but the bears kept the pressure on and the indices closed near their lows despite some small gains. The short-term trend is clearly down, but the descending angle is quite steep and probably won't sustain itself too much longer. That doesn't mean stocks are in the clear, but a relief rally wouldn't be a big surprise - if you can stand the heat. Some charts are OK, while other are cracking and investors are on edge and so bad news could trigger some panic selling. That would be a great buying opportunity if it happens. Buying fear usually pays off - but sometimes trying to catch the falling knife keeps the pain coming. Maybe a deal in Greece will make this all moot?


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

The Transportation index is one of the broken charts. It is now in a descending trading channel below the 200-day EMA. This is a bear market for the Trannies so look for rallies to be sold. Perhaps it can make a move to the top of the channel, but the bears will likely pounce on that kind of move and try to take it down again.


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

The EFA (EAFE index / I-fund) gapped to the upside on Thursday and had a big day, but despite the big gains, actually closed near the lows. The situation in Greece is putting the pressure on here and a deal could trigger a rally, but this is one of the broken charts and zooming up to new highs after a deal may be easier said than done.


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

China's Shanghai Index had a big day on Thursday gaining 5.8% but as we talked about before, some of the biggest market rallies occur during bear markets. Officially the Shanghai is not in a bear market but clearly there's trouble brewing. The rallies will be strong but might not last.


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

The AGG (bonds / F-fund) was off yesterday and closed on the 200-day EMA. If stocks can rally from here look for lower lows in bonds. If the selling continues in stocks, bonds should stay afloat.


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

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Thanks for reading! Have a great weekend!

Tom Crowley


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