TSP Talk Blog

Stocks has a little big of an Apple hangover on Thursday, but there was a wake-up call after the close when Amazon announced some big earnings and completely erased the Nasdaq 100 losses in just a few minutes. The Dow ended the day down 119-points and small caps got hammered again, but Amazon may try to put some life back in this hemorrhaging market.

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The S-fund held up early but sold off hard when the other indices started to falter. The I-fund closed higher and bonds rallied on the sell-off in stocks.

It's a little tough to do analysis when the charts don't show the big after hours reversal caused by Amazon, and a couple of other companies like AT&T's, strong earnings reports. Basically Thursday's Nasdaq's losses are gone and the other indices rebounded as well, although small caps seem to be in a world of their own lately. Bottom line, there's not a whole lot to say while looking at charts that are not quite as valid as they were at Thursday's close.

The SPY (S&P500 / C-fund) broke down through the 20-day EMA Thursday but closed above it, and the 20 and 50-day EMA's are now the support barriers that will try to keep the SPY from filling the large open gap (red.)


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

The Dow Completion Index (S-fund) posted an ugly negative reversal day. Watching this index during the trading day and it looks like it holds up OK, and then someone opens a trap door and it falls apart. There are no more immediate gaps to fill. It is just now a matter of whether it wants to retest the recent lows and the 200-day EMA or not.


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

The Nasdaq 100 ($NDX) was off sharply during the trading hours, but just after the bell Amazon reported earnings, and below in red I added what the futures were doing to this index. It basically erased the losses and had it close near the highs of the day. What that will mean for Friday's action remains to be seen. The charts have taken on some damage during this pullback, but it's possible that the bottom of the green filled gap could act as support. There's that small overhead gap (blue) that may want to get filled regardless of where it ends up in the coming days.


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

The Dow Transportation Index, the supposed market leader, fell hard from the overhead resistance proving that the bear market [in the Transports] is not over yet.


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

The EFA (EAFE index / I-fund) was off moderately Thursday and may be trying to fill that very small open gap near 64.40. That would be fine, but the I-fund bulls may take exception to filling the gap down near 62.70. Instead there's a gap up near 65.10. That resistance line is descending and may make it tough for the EFA to break its recent downtrend as we may be seeing a lower high being formed.


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

The AGG (bonds / F-fund) rallied on the weakness in stocks. It broke above the key moving averages but there is a resistance line in the way now. If Amazon can somehow turn the stock market around, as it did in the after hours trading, this could be another high for the AGG.


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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