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The bears can't make a move

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Stocks were up modesty on Monday and all of the TSP funds, including bonds, closed with a gain for the day. We knew the indices were getting extended and the indicators were very overbought, but the bears have not been able to do much and the action is pretty much as we expected it might be. That is, the underinvested will be jumping on every little profit taking dip we have seen.

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I actually wrote a quick commentary for Monday but being that I was on the road and out of my normal routine, I am easily distracted and I messed up and didn't get it uploaded correctly. Not that it matters anymore, but here's what I wrote for Monday's commentary.


7/18/16

Stocks were mixed on Friday as the Dow gained 10-points and small caps inched up 0.11% while the S&P and Nasdaq saw minor losses. Geopolitical events may be shaking things up a bit but as we have been saying for a few days now, stocks need some kind of pause to regroup and establish some basing and support.

Daily TSP Funds Return

The negative reversal day may be the start of some kind of pullback but I wouldn't get too bearish at this point. The action has been very good and any dip should bring in dip buyers who may have been left behind by the recent explosive rally. I see the 213 as some potentially good support.




If you look at the seasonality chart at the bottom of the commentary page you can see that the latter half of July is not as bullish as the first half, although during an election year it doesn't appear to be as pronounced.

I will be travelling Sunday and into Monday so I am going to cut this short. I'll leave Friday's commentary below as the analysis hasn't really changed. We're looking for some possible short-term weakness but I don't anticipate anything more than some healthy consolidation.

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


Stocks don't go up forever, but the overbought condition can also be alleviated by a consolidation as well as pullback, and that seems to be the question now... pullback or modest basing action?

I apologized but I have been travelling all day again on Monday evening so will make this quick again. I'll be back on my normal schedule on Tuesday.

The SPY (S&P 500 / C-Fund) has taken a couple of days to pause here near the new all-times highs, and the next levels of support for any pullback is in the 215 down to 213 areas, with both support lines rising.




The Dow Transportation Index is dancing around some serious longer-term resistance lines that could be a major tell for the market. That 8000 level is the place to watch and we'd be looking for 3 to 5 closes above those resistance lines.




The EFA (I-fund) has now closed 5 times above the 200-day EMA, something we look for to confirm a breakout, but the I-fund is quite flaky and volatile and I am more comfortable when the S&P or Dow makes a break like this. We'll take it a day at a time for the EFA, but so far so good.




The AGG (Bonds / F-fund) has pulled back off the recent highs as the strength in stocks may finally be taking money out of the bond market.




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

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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