TSP Talk Blog

Stocks opened moderately lower on Thursday but the selling accelerated a couple of hours into trading, before we saw some dip buyers show up to produce a little relief rally into the close. The indices still ended with stiff losses as the Dow shed 91-points, but that was more than 100-points off the morning lows.

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Whether this was a continuation of the hawkish Fed meeting minutes, or fear driven selling because of the downed jet out of Paris, or a combination of both, the downside has been getting oversold so some relief seems reasonable despite the deteriorating charts.

The S&P 500 (C-Fund) broke down from the neckline support of the head and shoulders pattern, and ran down and almost touched the 200-day EMA before finally seeing buyers step up and creating a possible positive reversal day. It still closed in negative territory so the reversal isn't too impressive, but clearly prices hit a point where people were willing to buy. The question is, will they continue today?




The DWCPF (S-fund) also broke below its immediate support and this one has been hanging below the major moving averages a little more than feels comfortable, so the positive reversal really needs to follow through and get back above that 990 - 992 area.




The EFA (I-fund) is just kind of drifting down without and major moves, but enough to make the chart look troublesome. There are some minor breakdowns here with some lower lows and the moving averages, but the 55.0 area is the major level that could be the difference between a pullback and a new bear market.




The price of oil also reversed from some early losses, and closed in positive territory. The question is whether the stock market cares anymore, or is it at the point now where the higher it goes, the more trouble it is for the consumer due to higher gasoline prices?




The AGG (Bonds / F-fund) was up slightly on Thursday, which was nothing more than a little dead-cat bounce off of Wednesday's sell off in bonds. Technical damage has been done to this chart so the 50-day EMA really needs to hold.




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Thanks for reading. Have a great weekend!

Tom Crowley


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