TSP Talk Blog

Stocks opened higher on Wednesday getting a boost from Apple's strong earnings report, but things faded as the FOMC policy statement neared. After the announcement, the indices bounced around quite a bit but ended mixed again with the Dow losing 2-points, the S&P and small caps also down slightly, while the Nasdaq shined and the Transports fell sharply.

After the bell Facebook posted some big earnings and the stock is up about 6% after hours so the outperforming Nasdaq may continue to lead today.

Daily TSP Funds Return More returns

The Fed did not make a move on interest rates and now the debate is whether they signaled that the economy and jobs market is performing well enough to consider a move in September. My theory is that they will continue to find a excuses to not raise because of the upcoming election. But if stocks keep rising and we get another good jobs report next month, they may be forced to do something or it will look suspicious, but those are big "ifs".

The S&P 500 has still not been down for 2 consecutive days since the Brexit lows, but it also now has an odd streak of being up then down for 10 consecutive trading days.

Watch Japan's market as they just announced a large economic stimulus package. It was expected and that may take some of the thunder out of the response, but it will be interesting to see how the Asian markets respond. The SPY (S&P 500 / C-Fund) was down slightly but remains in a base. In the last few days it has become less of an "F" flag and more of bull flag, although it's pretty flat. Could this be a flat top peak? Possibly, and that's what makes the current situation so interesting. Bull flags break upward while flat tops tend to break down. The large, steep flag pole could lean this more toward being a flag than a flat top.




The DWCPF (S-fund) is still in an "F" flag and who knows how long it will go? This pattern will frustrate those who are waiting for a pullback to get in, and that's what keeps it slowly rising.




The Dow Transportation Index has been chopping around quite a bit recently with yesterday being a sharp down day. It looks like a bull flag but it's getting a little messy. There is a lot of support in the 7750 to 7820 area, and a move above 8000 is what we'd look for to get a breakout.




The EFA (I-fund) is hanging in there after the breakout from the bull flag and is now testing the top of the flag pole. There is an open gap that seems to be drawing it in, so the thing to watch now is whether the top of that gap, if reached, acts as resistance.




The August seasonality chart shows that the month is not one of the stronger ones with a lot of choppiness and more negative days than seems comfortable.


Chart provided courtesy of www.sentimentrader.com


The AGG (Bonds / F-fund) had a big day after the Fed showed signs of a possible hike in September, but it remains in a bear flag - testing the top now - so today's action may tell us how serious the bond traders and investors are.



Administrative Note: The TSP Talk PGA Championship Golf Tournament Contest is starting this week. Go here for more information! The deadline is early Thursday just before the 1st tee-time.

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

Tom Crowley


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