TSP Talk Blog

Stocks opened lower on Wednesday as disappointing earnings from Apple set the tone for the day and sent the Nasdaq, which has been leading on the upside, down sharply. The Dow lost 68-points, but on the bright side, small caps finally outperformed, and Apple closed well off its lows of the day.

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The S-fund was up and the I-fund lagged badly. Bonds were up but closed well off their highs.

Here's the chart of Apple and this was the second straight earning reports that sent the stock reeling - the other was in late April. The difference this time was that buyers stepped up and the stock opened at the lows and rallied to close at the highs, but it still lost over 4% on the day which hurt the indices.


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

The SPY (S&P500 / C-fund) filled the small gap left open last week and despite what feels like a troubling pullback, surprisingly, it is just 0.85% off the all-time high. Now if it wants to fill the larger gap (blue) that would be a different story, but so far this dip has been contained.


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

The Dow Completion Index (S-fund) was down sharply early and filled the open gap, but bounced back to end the day with a small gain and just off its intraday high.


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

The Nasdaq 100 was hit the hardest yesterday with Apple's decline, and it didn't quite fill its open gap yet. This index isn't out of the woods yet. It had come a long way in a short amount of time and this is usually what happens when rallies like the one we had in July don't leave much support behind.


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

The EFA (EAFE index / I-fund) was hit hard too, which is interesting since Apple was the catalyst Wednesday and somehow it affected markets around the world. Or at least that was the excuse.


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

Just a reminded that the last two days had a negative seasonal bias which I have always attributed to a "sell the news" reaction to earnings, no matter how good or bad they are. Today is trading day #16 so the worst of the seasonality may be behind us.


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


The AGG (bonds / F-fund) rallied above the 50-day EMA for the first time in two-weeks, but it closed weakly and below the EMA, creating a negative reversal day in the process. This is still a bearish situation for bonds.


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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