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Bulls trying to hold on

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S
tocks were mixed after a choppy day on Wall Street. A late spike higher took the Dow to a 47-point gain, but the S&P 500 was basically flat and small caps and the Nasdaq were each down about half of a percent.

The bears were selling the rallies but we finally saw the bulls step up and buy the dips a couple of times yesterday. Being quite oversold, perhaps the indices are due for some relief.

Daily TSP Funds Return

The I-fund lagged and C-fund was up slightly while bonds added 0.10%.

The SPY (S&P 500 / C-fund) really doesn't have a whole lot of support between where it is now and the August lows, but it has already fallen a long way from the peak made 9 days ago. We know markets don't go straight up or down and with the indices oversold, the bears may run out of steam before their next attempt at a push lower. That said, the attempt at the rally yesterday was quite pathetic so the bulls may not have their hearts in it yet either.


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


The Dow Completion Index (small caps / S-Fund) has already broken down and has closed below the August lows for 2 days now.


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

This is a monthly chart of the S&P 500 back in 2002-2009 showing the breakdown from its long-term rising trend. That break down "h" formation in 2008 looks a little familiar.


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


Not that I expect another financial crisis-type bear market, but there are certainly some similarities in the breakdown of the 2011-2015 rising trend.


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


The Japanese Nikkei Index broke down to new lows on Tuesday after falling 4%, and Japan makes up about 10% of our I-fund.


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


While the Chinese Shanghai Index is not part of our I-fund, it is a major player in the global economy. It hasn't broken down to new lows yet, but then again the Chinese government is doing everything it can to keep it propped up, and that will likely only last so long.



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


The AGG (bonds / F-fund) was up again and we may be seeing a small inverted head and shoulders pattern forming within the rising channel. That's bullish enough to make an upside target up near the top of the large channel.


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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