TSP Talk Blog

Whatever it was, the massacre in California, the probable upcoming interest rate hike, the Fed on Capitol Hill, Mario Draghi on stimulus measure, Friday's jobs report, or something else, it seemed investors were looking for a reason to sell. The Dow lost 252-points and we saw a few breakdowns in the charts.

This morning, Friday we get the November jobs report and estimates are looking for a gain of about 196,000 jobs, and an unemployment rate of 5.0%. The Jobs Report Contest winner will be announced here.

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The dollar dropped sharply protecting the I-fund from the more severe losses of the U.S. stock funds. Bonds also fell sharply.

The SPY (S&P 500 / C-fund) fell through the 50-day EMA but managed to close above it. Normally the first test of the 50-day EMA will hold, and in a bull market you don't expect the 50-day EMA to be taken out for any length of time. Earlier this month the 50-day EMA was taken out for one day, on a closing basis. Obviously if it fails to go back above it, you can get what we saw last summer. There is a lot going on right now, economically, geopolitically, and even politically, so what happens next is questionable. The bulls are hoping that Friday's jobs report can erase the technical damage that we're seeing in these following charts.


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

The Dow Completion Index (small caps / S-fund) fell though, and closed below, the 50-day EMA, but it did come to rest on the longer-term rising support line. A breakdown would likely target the still open gap near 1000.


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

The Russell 2000 fell through both the 200-day EMA and the 50-day EMA, and that breakdown from the 200-day EMA is a major deal. That's two failures this month.


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

The Dow Transportation Index fell through the rising support line and once again the market leader is the least attractive chart of the bunch. It did fill a small open gap and closed above it, so there is a chance that the gap was the target, but I don't know. We're seeing some technical damage here.


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

The EFA (EAFE Index / F-Fund) fell from the apex of the pennant formation and below the 50-day EMA, after a small fake-out to the upside earlier this week. At the risk of sounding like a broken record, this is a technical breakdown.


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

The dollar declined precipitously on Thursday, filling two open gaps (blue), and opening another. We were talking about filling that large gap and testing the 50-day EMA, but yesterday's sell-off was a little worse than I expected, but it did fill that other small blue gap that I hadn't even noticed yesterday.


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

The AGG (Bonds / F-Fund) broke down sharply from the flag-like formation we have been watching, after a fake-out move to the upside earlier this week.


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


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Thanks for reading. Have a great weekend!

Tom Crowley


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