TSP Talk Blog

Stocks were down sharply Thursday with the Dow losing 174-points and the S&P 500 having it's largest daily percentage loss in six weeks. Global growth concerns are back in the headlines and oil was down again, although both stocks and oil closed off the lows as we saw a little buying in the last hour of trading.

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There's nothing very new to report. We finally saw the upside momentum wane and that was bound to happen after the run we've seen. The big question now is whether this is going to just be a pullback, or if this is another a lower peak after a bear market rally. We may have just seen the head test complete on the head and shoulders pattern that we have been watching for several weeks.


The S&P 500 (C-Fund) gave back Wednesday's gains but found some support at the 20-day EMA. It is below the resistance line coming off the 2015 peaks and is clearly in an interesting juncture here. Any further weakness needs to find support near the 200 and 50-day EMA's or there could be trouble.




Here's another look at the head and shoulders pattern as the head test continues to play out.



The Small Caps (S-fund) also found support at the 20-day EMA and is being squeezed between it and the 200-day EMA.




The Transportation Index is back below the trading channel and testing the important 50-day EMA. Support gets rather slim if that fails.




The EFA (EAFE Index / I-fund) was down sharply and remains in a new descending trading channel. It is back below the 50-day EMA and unfortunately this is what a lot of overseas market charts look like - actually they look worse.




The AGG (Bonds / F-fund) was up again as investors looked to bonds for some safety during the sell-off in stocks. The trading channel remains intact.



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Thanks for reading. Have a great weekend!

Tom Crowley


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