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Some new lows

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Monday started out with a jobs report hangover from Friday, but problems in Greece and signs of a global economic slowdown hit stocks hard, and also pushed bond yields down to a one year low of 1.74%. There was some buying in the last hour of trading and, o
nce down 401-points, the Dow came back to close down "just" 178-points.

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R
eminiscent of the days of the 2011 austerity riots in Greece , the Athens Stock Index lost nearly 8% on Monday as banking and credit issues are back in the headlines.


The SPY (S&P 500 Index / C-Fund) was down sharply but closed well off the lows and created what may be a positive reversal day, despite the losses. There was an open gap created up near 187.50 and if that can get filled we "may" have seen a double bottom. It may not be the end of the bear market, but perhaps a playable bounce up to some resistance.




The
Dow Completion Index (small caps / S-Fund) also test the January lows and it held so far. It's too early to claim as a successfully test, but a couple more days above those lows and it will be. There is resistance falling fast off the previous two peaks so the upside may be limited on any rally. A move up to 900 would be a 4.6% rally from current levels so it's not insignificant.




The
Dow Transportation Index led again by only losing 0.27% on the day - remaining in the flag formation yet again and creating a kangaroo tail reversal.




The loser recently has been the Nasdaq and the Nasdaq 100 (QQQ). The QQQ fell to new lows and closed below the January low after gapping down on Monday. Like the other charts, there is a positive reversal formation but the January lows could act as resistance now. If it can get back above that 97 area perhaps we'll be able to call this a failed breakdown.




The EFA (EAFE Index / I-fund) filled one gap (blue) while opening another (red) yesterday, and it has held above the January lows so far.




The problems yesterday stemmed from a decline in oil, but also the meltdown in Greece's stock market, which has been in a down trend for months, but yesterday's action was severe.




The AGG (Bonds / F-fund) was up again showing that the rally in bonds has been for real. And yields?...




The yield on the 10-year Treasury is all the way down to 1.74%. This doesn't look like what we might expect in a growing economy. Is anybody out there going to admit we're in a recession or will we get the typical rear-view mirror indicators that tell us we "were" in a recession?




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

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