TSP Talk Blog

Stocks were down yesterday as the Dow lost 181-points, or 1% thanks to a decline in IBM, while the Nasdaq fell just 0.21%, but after hours Apple disappointed and we saw the Nasdaq slip further. The Transportation Index was actually up on the day as investors may be looking for a place to put money beside bonds and money markets.

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The small caps were trying to outperform and hold on early Tuesday, but quickly gave way as the downside pressure in the larger stocks was too much for them.



The dollar was down sharply helping the I-fund to hang onto gains. Bonds were up.

The SPY (S&P500 / C-fund) fell moderately to nearly fill the most recently opened gap, and if the negative futures hold, that gap could get filled near the open. The question is, will the bottom of the gap act as support or will open gap #2 be moved into the cross-hairs?


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

The Dow Completion Index (S-fund) also nearly filled its open gap. Although down, that is not a bearish move yet. It is more of a healthy move... unless the filled gap does not produce buying. But clearly this chart is lagging the large caps.


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

The Nasdaq was off slightly but that was before Apple released their earnings after the close on Tuesday where we saw more pressure on the tech-heavy index in after hours trading. But again, a pullback is not unhealthy, especially after a rally like we have seen, unless support levels start to get taken out. Even that tiny gap near 5125 would be acceptable, but the large one down near 5000 may not be too healthy anymore.


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

The leading Dow Transportation Index was actually up and while it remains below the key 50-day EMA, it did temporarily stick its head above the descending resistance line. Nothing bullish here yet, but it is trying. Even if it can break those two levels, the 200-day EMA is still there as a potential roadblock.


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

The EFA (EAFE index / I-fund) nearly filled that small open gap again (red), but the weakness in the dollar likely held it up. This one could go either way but so far it has been able to hold above the 50-day EMA, which is a plus, an if the dollar is peaking here...


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

And here is what happened to the dollar yesterday. It hit a possible wall at the May / June highs and is backing off a bit. It could be temporary because support is rising and that first open gap looks primed to get filled.


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

The AGG (bonds / F-fund) rallied up into the resistance area again but continues to close below the 200-day EMA despite the intraday spike above it.


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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