TSP Talk Blog

Stocks opened lower again on Wednesday, tried to rally back, but the dip buyers were swatted away quickly. The Dow ended the day down 100-points, which was about where it started the day so there wasn't too much damage during the course of the day once the morning lows were established.

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Technically there are several charts testing the 50-day EMA - a key level for a bull market.

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The S&P 500 (C-Fund) just about touched the 50-day EMA yesterday before we saw a slight rebound. The 50-day EMA is often broken during pullbacks but the snap back rallies can be fast and furious so it's tough to time trying to jump in and out. if you look at a chart on the left side and in the center, it looks easy to pick peaks and bottoms, but when you have to analyze the right side of the chart, and it's not as easy.




The DWCPF (S-fund) fell just below its 200-day EMA but if you squint your eyes you can see that it actually just filled a small open gap from back in April. That could provide support, but that 50-day EMA at 990 is also a possible target.



The Nasdaq 100 has been one of the hardest hit indices having fallen below both the 50 and 200-day EMAs last week. There is some support at 4300 but after that there isn't much until that open gap near 4000. There is also an open gap above 4500 that makes things interesting.




The EFA (I-Fund) is also now below the 50 and 200-day EMAs after filling the open gap near 57.50. It opened another small gap (red) near 59.00. The rising support line has also been penetrated so this index needs some good news fast. The Japanese market has been closed since Monday because of a holiday, and won't reopen until Friday. If you remember, it left us with a pair of back-to-back -3% days.




The High Yield Bond Fund from Credit Suisse has actually held up well during this pullback in stocks, which is normally a good sign. The 50-day EMA recently moved above the 200-day so it will be interesting to see if stocks catch up to this HY fund, or if the high yield fund comes down to the level of stocks' pullback. It's not typical to see them move in opposite directions for any length of time.




The AGG (Bonds / F-fund) was up slightly but closed right on the resistance line again. It looks like it wants to break out, but nothing serious yet.



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Thanks for reading. We'll see you back here tomorrow.

Tom Crowley


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