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Another FOMC Week

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Stocks were mixed on Friday after a late rally erased most, if not all, of the the morning losses. The Dow gained 21-points while the S&P was flat, small caps were up strongly, but the Nasdaq was down on tech earnings. The dip buyers barely lasted an hour on Friday after the 100-point loss on Thursday and more weakness to start the day on Friday.

Daily TSP Funds Return

The early selling was mostly triggered by the disappointing earnings guidance given by some large companies from Alphabet (aka Google), Microsoft, Visa, and Starbucks. Why stocks came back, I don't know exactly except there is an FOMC meeting this week (Tuesday and Wednesday) and we know that their new job seems to be to keep stocks prices up, and who wants to sell into that?


The S&P 500 (C-Fund) was down early on Friday but reversed the losses and closed flat. You can see that it is pausing a little at the prior highs, but that's normal. The early losses had it below what could have been defined as a rising wedge (blue dashed line), but it crawled back into the wedge by the close. The areas of support to watch are 2090 (bottom of the wedge), 2069 (bottom of a channel and the 20-day EMA), and then 2030 (50-day EMA).




The Weekly chart showed a possible negative reversal similar to the one last November. Also the descending resistance line in the 2090-2095 area will be tested again to start the week.




The DWCPF (small caps / S-fund) continued to hug the upper end of it rising trading channel. There seems to be more room on the downside if the channel remains intact. A move to the lower end of the channel would also test the 20 and 200-day EMAs.




The EFA (EAFE Index / I-fund) broke below the sharply rising trading channel (blue) and it seems to want to try fill that first open gap just below 59. There's a lot of backing and filling that can be done here with those open gaps, but in a bull market you'd also expect the 200-day EMA to hold as support so that's the fork in the road here.




The Japanese Nikkei has been on fire the last couple of weeks making a higher high and closing at its highest level since January. But on the weekly chart we may be seeing a large bear flag peaking here. How this plays out may be the clue for the action of the next few weeks.




China's Shanghai Index may have actually broken down from a bear flag, or wedge formation, and now trades back below the 50-day EMA. One of the catalysts for the buoyancy in U.S. stocks has been the talk of a more bullish economic outlook in China, but if this starts to break down again...




The AGG (Bonds / F-fund) closed basically flat on Friday while the F-fund gave up 0.04%. The failure to breakout last week put a little pressure on bonds as it flirts with the 20-day EMA. The 110.00 - 110.30 area looks to be decent support if the pullback continues.




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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S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes