TSP Talk Blog

Stocks had a bit of schizophrenia on Wednesday as it struggled to find direction before settling on the upside after a sharp spike higher just after 2 PM ET. Tech stocks lagged initially hurting the indices, but oil rallied and eventually stocks caught up to that rally.

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I don't know if you have ever had the chance to read one of RevShark's market commentaries, but he is one of the best at analyzing the action and putting it into words. In yesterday's afternoon commentary he wrote:

"These days trading is often about guessing how computers are programmed to manipulate emotions. Typically, that means surprise reversal intraday like we had today. It probably scares away many casual market players but there probably aren’t many left anyway."

That about wraps up the action we saw yesterday - random and confusing.

On Friday morning we get the January jobs report and estimates are looking for a gain of 188,000 jobs, and an unemployment rate of 5.0%. The Jobs Report Contest is now open in the forum. Click here.
I'm taking my annual trip to warmer weather this week so market commentaries may be brief and my response time to email and messages may be slower. I apologize for any inconvenience.

The SPY (S&P 500 Index / C-Fund) broke down from the level I had mentioned yesterday as key support, but that apparently was a head-fake, something the market loves to do to us. By the close we saw it creep back into the "V" formation and that kind of reversal tends to be a bullish sign for at least the short-term trading this morning.




The Dow Completion Index (small caps / S-Fund) broke below the bear flag, as bear flags tend to do, but kept us guessing by jumping right back into the flag by the close. A bear flag is a bear flag and it tends to end bearishly, so I'm not sure what to make of yesterday's action except that we may see another push to the top of the flag first - or the 20-day EMA if it can't get that high.




The EFA (EAFE Index / I-fund) nearly filled its open gap near 53 but came up just short before revering to the upside. That's not a bad sign but it's usually better to get the gap completely filled so that we're not looking over our shoulder at the partial opening.




The price of oil rallied sharply on Wednesday getting back all of Tuesday's losses and some of Monday's. If this is a higher low forming that could be a bullish sign for stocks, although oil refinery stocks were down again yesterday despite the jump in oil prices. That may be looking too far ahead since it remains buried in a downtrend.




The AGG (Bonds / F-fund) continued its bullish ways early on Wednesday but as soon as stocks started to rally, we saw bonds reverse down closing basically flat on the day. Still, that is three closes above the old resistance line so its at or close to being a confirmed breakout.




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

Tom Crowley


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