TSP Talk Blog

Stocks took a breather on Tuesday where neither the bulls nor the bears could make much headway, but some stiff overhead resistance held giving the bulls a reason to do a little profit taking. The Dow gained 14-points with most of that gain coming from a 7.7% pop in DuPont's stock price and a jump in oil related companies, while the broader major indices all suffered moderate losses.

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Volume remains on the light side which means the selling wasn't intense, but also means that we may not have seen the institutional money getting into the market on this rebound. The good news is, once they do the upside may be more consistent. The bad news is, why aren't they buying yet?

We saw a little bit of a decoupling in the price of oil and stock market, which had been following each other fairly closely recently, but oil jumped 5% yesterday while stocks were down.

The SPY (S&P 500 / C-fund) dipped just below the 50-day EMA again, and it remains below the 50-day MA (simple moving average). It seemed to find a little support at the old descending resistance line, but that new support is moving down. A gap remains open at 195.


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

The Dow Completion Index (small caps / S-Fund) is still lagging the larger stock indices and is pausing at one of the weaker resistance lines (dashed.) Those orange lines are all parallel so that could be another layer of resistance near 1020.


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

The Dow Transportation Index is also testing, and so far failing, at resistance in the form of a descending resistance line plus the 50-day EMA and SMAs.


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

The German DAX is a good indicator of what the I-fund may be up to and the rising wedge and short-term descending resistance are trying to hold it back right now.


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

The price of crude oil broke out of the bull flag that we have been watching. But keep an eye on it for a few more days. Those pennant formation do have a tendency to break one-way and turn into fake-outs before reversing and breaking the other way. Give it 3 days.


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

The AGG (bonds / F-fund) rallied up to fill that tiny open gap from Monday. It remains in its rising trading channel and that gives it a slight bullish bias for now.


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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