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Up, down, up, down, up....

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Stocks sputtered out of the gate on Thursday but found some footing during late morning trading and ended the day with solid gains. Right now there is a battle going on between the bears, who are looking for a retest of the August lows, and the bulls, who feel the lows are in and the path of least resistance is up.

I have to admit that I could probably flip a coin to give you my best guess for the short-term. Fortunately I have a system to steer me in a direction. It's not always correct, but it keeps my emotions out of the decision making. TSP Talk Plus subscribers get that information just as subscribers to Interpid Timer's service, Revshark's, and Coolhand's get their allocations, but the short term is a tough call for anyone.

Just to follow up on the Nikkei's huge 1300-point gain (+7.7%) on Wednesday... It did pullback on Thursday but it only gave back 2.5% so that's a small victory there.

Daily TSP Funds Return

The I-fund lagged paying back some of Wednesday's over pricing. Bonds were down.

With basically one opportunity to buy per month in our TSP accounts, it is tough to navigate through a market that is up one week, down the next, then up again, etc. We haven't had back to back up or down weeks since late June / early July...



To make things worse, in September we seem to be taking turns being up and down every day too. Those big triple moves are concerning and it feels good to be on sidelines when those numbers are red, but you're also missing out on the big positive numbers if you're sitting out. It's not easy in our situation.



The SPY (S&P 500 / C-fund) is still within what looks like a bear flag... or is it a bull flag? The pole is on both sides of the pennant formation and that makes a tough market call even tougher. Looking at the moving averages and you'd have to expect the upside has more resistance than the downside has support, but if we have seen the lows then that resistance could be taken out easily. We'll see.


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


The weekly chart of the S&P 500 shows that this correction is not going to be the single reversal bar like we saw last year, so it looks more like the 2011 low and that may mean it needs some time before the correction gets digested.


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


The Dow Completion Index (small caps / S-Fund) does not have a bull flag possibility like the S&P 500, so this looks more bearish.


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


The EFA (EAFE Index / I-fund) also continues to struggle and while there seems to be some upside momentum recently, that big open gap is still staring us in the face.


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


The dollar had been rallying quite strongly off of the August lows, but it seems to be pulling back again before making a higher high. This looks a little bearish here and I don't know exactly how stocks will react if the dollar pulls back again, but you can see that the dollar and stocks were both clobbered during the August sell-off.


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


Oil rallied on Thursday and this is starting to look like a bull flag, but it remains below the 50-day EMA so it's difficult to make a bullish assumption. Stocks would almost certainly benefit if oil can rally out of this flag.


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


The
AGG (bonds / F-fund) was down slightly on Thursday and remains in a rising trading channel. If it can stay within the channel, then it will be OK, but because this looks slightly bearish, I wouldn't be surprised if the channel gets broken to the downside. Perhaps next week when the Fed has their FOMC meeting?


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



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. Have a great weekend!

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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