TSP Talk Blog

Stocks reversed the Sunday negative night futures market and rallied at the open on Monday. The Dow gained 175-points - not quite getting back the 200+ it lost on Friday, but the S&P 500 and small caps did recover and surpass Friday's losses.

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The rally seemed to be triggered by another rally in the oil market which has remained resilient, but yesterday's move higher is hitting some overhead resistance, albeit rising resistance.




The S&P 500 (C-Fund) rallied and held again at the 50-day EMA and the neckline of the head and shoulder pattern that we have been watching. Technically it didn't do much more than that since it fell short of breaking above the descending resistance line off the recent highs. As we talked about yesterday, it is not uncommon to see a head and shoulders pattern break to the upside while the market is in a positive trend since they are continuation patterns, but large H&S patterns could also be topping patterns so which way this breaks is obviously crucial.




The DWCPF (S-fund) also rallied off the 50-day EMA but remains below the resistance line. It also has an H&S pattern the analysis is similar to the S&P.




The Dow Transportation Index is the big concern since it has never seen its 50-day EMA move above its 200-day EMA and now the 50-EMA is falling. The 7600 level broke last week and now that will be the place to watch for potential resistance on the way up. Then there's a ton of resistance in the 7750 - 7800 area.




The EFA (I-fund) bounced with the rest of the market but it too is struggling to hold onto its positive trend of higher lows, but it did close back above its 50-day EMA yesterday. A move below 57.0 would be bearish and the 55.0 area would be a serious breakdown but there's a lot of wiggle room before it gets there.




The AGG (Bonds / F-fund) slipped as investors jumped back into stocks. It's been basing again for the last couple of weeks. You can see the make or break support lines.




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

Tom Crowley


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