TSP Talk Blog

Another day, another Fed triggered rally, although to be fair, stocks were up prior to the release of the FOMC meeting minutes, but the minutes sent stocks into another gear. The Dow gained 248-points and we saw gains of over 1% in most U.S. indices with financials outperforming based on more interest rate hike considerations.

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Whether this is an all's clear for the market, or just a temporary Fed triggered rally can only be determined after we see a couple days of follow-through. Volume wasn't heavy so it wasn't an all out run for stocks.

The SPY (S&P 500 / C-fund) filled that small open gap at 207.66 after the Fed minutes were released. It probably would have done so eventually without the Fed, but they hastened the inevitable, plus it broke through the top of the gap where the tops of gaps can often act as resistance. Not this time. At least for now. It was emotional money for sure, as those on the sidelines rushed to get back in, but volume wasn't excessive so I'm not sure who was doing the buying.


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

The Dow Completion Index (small caps / S-Fund) hit the 50-day EMA and that old neckline we have been watching for weeks. The big gap remains open and whether that gets filled will be put on hold until we find out if this new rally has any legs.


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

The Dow Transportation Index found support on Monday, rallied back above the 50-day EMA on Wednesday, and now another test of the 200-day EMA is imminent. It could be a bull flag forming but the 200-day EMA is the key here.


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

This EFA (EAFE Index / I-fund) is still bouncing off of the top of the large open gap. It made its way back above the 50-day EMA and now there's some resistance at 61. The 200-day EMA is currently at 62.


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

The AGG (bonds / F-fund) was basically flat as it is having a hard time getting back above the old support line and the 50-day EMA. The bear flag is pretty obvious and that "should" mean a breakdown is coming.


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

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Thanks for reading. We'll see you back here on tomorrow.

Tom Crowley


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