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Buyers step up... for one day, anyway

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Stocks rallied at the open on Tuesday, and never looked back. There was a little selling into the close to take the indices off their highest levels of the day, but the 213-point gain tells the story. Some descending resistance was broken, but it was the 8th consecutive day of alternating losses and gains, so does that mean today will be down?

Daily TSP Funds Return

This market has been anything but loved and many hedge funds have their highest cash levels in some time, leaving us with the possibility of a "FOMO" rally (fear of missing out.)

The action was quite good with all of the things you might expect to happen during a rally occurring - safe havens like gold and bonds were down, while oil was up, despite the dollar also closing higher.



The S&P 500 (C-Fund) continued to push higher off the 200-day EMA and the neckline of the head and shoulders pattern. It's a little early for the bulls to claim victory since we're still in an up / down pattern for the last eight days, but the technical picture does improve with yesterday's action. As we've mentioned before, head and shoulders patterns can be continuation patterns, breaking in the direction of the larger trend before the H&S pattern started. I know most were assuming a head and shoulders pattern would end negatively, and that may be why the rally was so strong since it caught many by surprise.



This could just be a test of the head, but that does not mean that test will fail. It's a matter of playing it day by day now and seeing if the bulls have the strength to push this consolidating market to new highs.

The DWCPF (S-fund) is in a similar situation, but the breakout above the 200-day EMA is a big plus here that the S&P did not have to deal with.




The Dow Transportation Index, the market leader, is in more of a sticky situation having formed a second bear flag and finding resistance at the 20 and 50-day EMA's while lagging the other indices with just a 0.56% gain on Tuesday.




The EFA (I-fund) broke above its descending resistance line and the 50-day EMA, and it is now dealing with the 200-day EMA.




The AGG (Bonds / F-fund) was down moderately although it did find some support at the 50-day EMA and closed off the lows. It looks like the bear flag broke down and the AGG closed just below the old support of the flag.



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