TSP Talk Blog

Stocks stalled on Tuesday after a two day rally. China's Shanghai turned ugly again losing 6% last night and it probably doesn't take much to move this market when late summer light volume kicks in, but the losses were modest and the Dow shed 34-points.

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The S-fund lagged and bonds were down 0.20%.
I'm not overly concerned about a late summer down day if the trading volume stays light, but depending on which chart you are looking at, there is case that can be made for the bulls or the bears.

I have a friend from New York in town this week through the weekend so I may not be as accessible and the commentaries may be brief for a few days. I've lived in Utah for over 20-years now and while I've gone back to New York many times since I have moved out west, this his first visit out here. We actually met while working in McDonald's when we were teenagers, so we go way back. We're going to fly to Denver to catch a couple of Mets games so I may not be around too much in the next several days. Too much information? Just letting you know in case I'm running late updating the commentary, the Autotracker, etc. As usual, the TSP Talk Plus subscribers will get a little more insight, and the Plus System signals.

The SPY (S&P 500 / C-fund) is in an inverted head and shoulders pattern. If we are still in a bull market, we should expect to revisit the old high in the coming days / weeks. That red resistance line was broken so now the bulls will want to see it hold as support. If the bull market is going to fade on us, it may be start to show in the way of not completing the right shoulder.


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

The Dow Completion Index (S-fund) made the same move, breaking above resistance on Monday, and falling back on top of it on Tuesday, but holding there so far.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) is not looking very good but I would give it a chance to fill that gap near 62.70 before getting too bearish. If the bottom of that open gap does not hold, then we have a problem here.


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

China's Shanghai Index fell over 6% on Tuesday having failed again at the 50-day EMA. This looks like a big bear flag so we'll be watching the bottom of the flag, and if it fails, this could really break down. How much this affects U.S. stocks remains to be seen, but we know there will be an impact if it does break down further.


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

The AGG (bonds / F-fund) was down on Tuesday falling below the support line of the trading channel, but it remains above the 20 and 50-day EMA so this isn't a breakdown yet.


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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