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Have stocks peaked, or is this a buy-able dip?

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The hangover from the "no change" out of the Bank of Japan rolled into Friday's action and stocks opened lower. The Dow was down about 180-points at the low on Friday, but buyers stepped up in late afternoon trading and took stocks off their lows, and the Dow ended the day down 57 or 0.32%.

Daily TSP Funds Return

There was also a bit more of a hawkish tone from the Fed last week so we may just be seeing some profit taking after a substantial 2-month rally. The markets have become accustomed to riding the coattails of dovish Central Banks, so these minors hawkish signs may be giving investors some pause.

The losses kept the TSP indices in the red for the week, but it was a positive month for all of the TSP funds. For the year, only the I-fund is in negative territory with the bond fund leading the way. So it hasn't been a great year for stocks, but it has certainly improved over the last couple of months.




The S&P 500 (C-Fund) pulled back again from those late 2015 highs. It doesn't mean it is a market top because selling at the old high resistance is normal, and could be temporary. But it also doesn't mean it isn't a top. You just have to wait and see how it plays out and watch the typical areas of support like the 50-day and then the 200-day EMAs. Bull markets don't tend to rollover on a dime and if this does turn out to be a top forming, look for the bulls to make some noise, like we saw in November and December, before they do give up.




The SPY shows the open gap getting filled on Friday which, as we talked about last week, both the bulls and the bears probably are happy about. Open gaps tend to keep investors looking over their shoulders.




The weekly chart of S&P 500 shows that reversal bar from a couple of weeks ago, and the overhead resistance did hold last week. That 2110 - 2120 area will be the key areas for the bulls to try to take out, otherwise the bears may start putting on more pressure.




The DWCPF (S-fund) fell toward the bottom of its rising trading channel, temporarily falling below the 20-day EMA on Friday before getting a little bounce into the close. The 200-day EMA is at 1000 right now, so that and the bottom of the channel are key support areas to watch.




The Nasdaq 100 is one of the major indices that is showing some wear and some bearish activity as the test of the head in the head and shoulders pattern has been failing so far. That may be trouble if it can't turn around soon. Some mixed earnings reports from the larger Nasdaq stocks have shaken things up.



The EFA (I-Fund) hit the 200-day EMA on Friday but rebounded before the close and is holding above it. The large gap below remains open so the 200-day EMA needs to hold or we will likely see a move down to 57.50 to fill the gap and test the 50-day EMA.




The AGG (Bonds / F-fund) was flat on Friday although the F-fund posted a modest gain as bonds slipped late on Friday. Since the bond market closes at 3 PM ET and the AGG trades until 4 PM, sometimes the F-fund price does not take the last hour into consideration, but it should be applied to today's price.




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.

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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