TSP Talk Blog

Stocks opened slightly lower on Tuesday but it didn't take long for the buyers to step up and send the indices higher again. The Dow picked up another 89-points while the S&P 500 and small caps each added about 0.25%.

The relentless upward movement brings on a little panic to those who are not yet invested, particularly money managers who must show their results in quarterly reports, and they feel forced to chase the gains. That's how it feels right now. Every little dip is being bought and it will continue until the last investor (metaphorically) gives up (capitulates) and buys into a market that is running away from them. And theoretically that's when the rally will stop and a pullback will ensue - when the metaphorical last buyer buys. That could happen today, or it could be weeks from now.

Daily TSP Funds Return More returns

On Friday morning we get the October jobs report and estimates are looking for a gain of 181,000 jobs, and an unemployment rate of 5.1%. The Jobs Report Contest is open in the forum. Click here.

The SPY (S&P 500 / C-fund) moved above the old rising resistance line on Monday, and then yesterday that line held as support. Now there is a double dose of support as the support and resistance lines from the rising wedge are crossing at 210. That seems to be the drop dead price right now. If that breaks we could see a pullback, but until then the bulls will ride this wave of support.


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

The Dow Completion Index (small caps / S-Fund) hit the 200-day EMA yesterday and backed off a bit. Clearly this is a big sport for the small caps.


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

The Nasdaq is now within a stone's throw of its all-time highs. That means it has nearly recovered all of its losses from the summer bear market. The markets can be funny. Remind me again why it lost about 18% in August? I guess everything is now fixed? Perhaps it was just a flushing out of the weak stocks and allowing new leaders to emerge. That's what bear markets tend to do.


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

The Dow Transportation Index was actually down yesterday, just as it testing the 200-day EMA again. It has been moving sideways for the last several weeks trading between 8000 and 8300, and it has either gathered the strength to finally breakout of its bear market, or it is about to fail again. What happens here will be a great indication for the rest of the market.


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

The EFA (EAFE Index / I-fund) is also battling the 200-day EMA. If it follows the action of the inverted head and shoulders pattern that we saw in the Dow Completion Index last week, we could see this breakout above the 200-day EMA, but now that's 3 major indices that are testing the 200-day EMA (small caps, Transports, and the EFA) so we're at quite a crucial point for the market right now.


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

The AGG (bonds / F-fund) broke down from the small bear flag we noted yesterday. It is now below the 50-day EMA, and has close below the rising trading channel for a 4th straight day. It appears bond traders are starting to embrace higher interest rates. As prices fall, yields move up.


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. 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.