TSP Talk Blog

Stocks bounced around quite a bit on Friday, but the headline of the day was the relentless buying during the final two hours of trading just after the Dow had fallen into negative territory. The Dow ended the day up 74-points capping a decent week for stocks, although not all indices survived the week with gains.

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The large caps of the S&P 500 and C-fund picked up almost 1% on the week, and while it felt like the bulls were in control, the small caps didn't quite make it into positive territory and ended the week with a small loss. The I-fund picked up a small gain and bonds also had a decent week.



The SPY (S&P 500 / C-fund) remained buoyant and closed above the 200-day EMA for a second straight day. It's not shown but the 200-day SMA (simple) in still overhead just above 204. We're seeing some good signs here as the market decides it it want to come out of a bear market and move back into a bull market, and moving above the 50 and 200-day EMA's is certainly a good start. It's all but official at this point but stocks need to continue higher this week or it could fail here.


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

The weekly chart of the S&P 500 Index ticked above the 50-week EMA but it could still be a big bear flag at this point. A solid week for stocks could negate that.


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

The Dow Completion Index (small caps / S-Fund) was flat on Friday lagging the larger indices, and it is still struggling to get above the 50-day EMA and the descending resistance line.


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

The Dow Transportation Index is above its 50-day EMA but it is dealing with the important 200-day EMA now. There's some resistance and knowing the Transports led the market into the summer bear market, it would be important for this index to lead the market out of a bear market, but so far it has not.


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

The EFA (EAFE Index / I-fund) made a 9-week closing high on Friday and is testing some overhead resistance now. The large open gap is still looming as a possible pullback target so an upside breakout would be very important here.


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

Some of the recent strength in the I-fund, which has the best return in October, has been as a result of weakness in the dollar. We saw a couple of up days to end the week last week, but you can see that the dollar (UUP) remains in a downtrend and is now below the 200-day EMA.


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

Monday is trading day #13 in October, and history suggests that the market is in a weak two-week period.

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

The AGG (bonds / F-fund) were basically flat on Friday and remain in a rising trading 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


Posted daily at TSP Talk - Market Commentary

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