TSP Talk Blog

Stocks opened lower yesterday and like Monday, we saw dip buyers jump in by late morning. The bears made another push lower in afternoon trading and the difference between Monday and Tuesday is that the dip buyers stood aside this time. The Dow lost 110-points but it, and S&P 500, had been up for 5 straight days so a pause is not a big surprise. The question of course is whether this is a temporary pause or a bear market rally peak since several indices stalled at resistance.

Daily TSP Funds Return More returns

The small caps and Transportation Index, both which have been leading during this recent push higher, were clobbered yesterday with the Russell 2000 losing 2.4% and the Trannies falling 2.7%.

Oil was down sharply (-4.34%) but it basically only gave back Monday's gains.

The S&P 500 (C-Fund) moved from the top of its rising wedge on Monday, to the bottom on Tuesday so it remained above support. The 20-day EMA is starting to cross the 50-day EMA and that tends to be a sign of an overbought market in the short-term. A pullback to the 50-day EMA would not be alarming in and of itself, but it would have to break below the wedge to do so.




The DWCPF (Dow Completion Index / S-fund) is also testing the support line of the rising trading channel after breaking the very short-term support line (red dashed line).




The Nasdaq 100 (QQQ) was the first major index to break below its rising wedge pattern - which is what a rising wedge is supposed to do, but during the recent rally we saw a few breaks to the upside in a few indices. The QQQ managed to closed a couple of cents above the 50-day EMA.




The Dow Transportation Index lost 2.7% but without too much technical damage being done. The biggest concern here is that it is failing at the 200-day EMA, which can be a bear market rally killer.




The price of oil made a brief new high for the year yesterday before reversing downward, but the stiff losses only took back Monday's gains and it remains in a rising trading channel.




Bond yields did fail at the 50-day EMA so the bear flag remains intact which means bonds and the F-fund are looking a little bullish.




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.