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Pre-holiday reversal?

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Stocks gapped up on Wednesday morning, and after a weak attempt by the bears to push back, the bulls took charge and the Dow ended the day up 293-points. The volatility is still elevated, and while this is a good step for the bulls toward generating a bottom for this correction, we are in low volume, pre-holiday trading territory, it is possible that this is a temporary move in an attempt to fill open gaps.

A reminder that China's stock market was closed last night and is closed until Monday so investors may be a little more willing to be aggressive knowing that catalyst is off the table for a few days.

On Friday morning we get the August jobs report and estimates are looking for a gain of 217,000 jobs, and an unemployment rate of 5.2%. The Jobs Report Contest is open in the forum. Click here for more information.

Daily TSP Funds Return

The C-fund led and bonds were down slightly.

The SPY (S&P 500 / C-fund) filled one small open gap and seems to be attempting to filler the larger one. If this is a pre-holiday reflexive reversal, it may be a temporary move, but the market loves to fool people and not believing this rally could be costly. How's that for covering both sides of the story? Bottom line, we are basically in a bear market, depending where you look, and when in a bear market, don't rule out a bearish outcome.


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


The longer-term weekly S&P 500 chart shows a few major market bottoms. There were a few minor lows made in between but the 2011 and and 2014 lows were the most dramatic and each had a different path to the lows. One was a classic "V" bottom and in 2011 it was a series of rallies and retests of the lows that lasted for months. This week's selling and last week's close below the 50-week EMA may have ruined the chance of an exact duplicate of the V-bottom we saw in 2014, but it's still possible that the low has been made. Or, it could be churning more like the lows in 2011.


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


The Dow Completion Index (S-Fund) reversed upward and created a possible positive reversal day, but this chart is far from bullish so once any open gaps get filled, be careful on the upside.


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


The EFA (EAFE Index / I-fund) is also attempting to fill a large open gap, which is what markets try to do. Other than that, this is not a bullish chart yet. Could it be a completed successful test of the August 24 low? I guess so, but not likely given the bear market status.


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


The
AGG (bonds / F-fund) is holding above the rising support line and the 50-day EMA, but is that a bear flag being created?


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


Per www.tsp.gov: "
Some financial markets will be closed on Monday, September 7th in observance of the Labor Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (September 7th) will be processed Tuesday night (September 8th), at Tuesday's closing share prices."

Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php

Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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