TSP Talk Blog

Stocks waffled the first half of the day on Wednesday but an afternoon rumor regarding OPEC and a reduction oil production sparked a rally in oil related stocks, and program trading kicked in spreading the wealth into other sectors. The oil sector heavy Dow and S&P benefited most with the Dow adding 111-points. The Nasdaq, which had been leading the market, lagged with a small gain, while small caps had a nice day playing some catch up from its lagging day on Tuesday.

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As we talked about this week, the major catalysts are behind us or ahead of us so the market was looking for any reason to make a move - up or down, and the OPEC rumor was the ticket yesterday. It was just a rumor as nothing was agreed upon, so this could reverse down. It sounds like it's on Iran to agree to the production cut or it's no deal.

Today before the open we get the 3rd estimate of the 2nd quarter GDP which is expected to be 1.3%, and with the Fed watching growth, it could be a market mover.

The SPY (S&P 500 / C-Fund) filled the gap left open from Monday's trading and it's debatable whether this is a bearish flag or just another move toward new highs within a rising trading channel. The flag portion is quite long compared to the pole so that's technically a bad example of a flag, but the top of the channel is being tested now regardless of what we call it. That makes today's action start with some potential upside limitations. If it can break above that resistance, the flag would be gone.




The DWCPF (small caps) filled its open gap as well, and closed above it. Plus the cup and handle formation we talked about has broke to the upside so this chart looks pretty good.




The price of oil was the main story yesterday as the 5% rally triggered a broader rally in stocks. The flag formation (red) broke to the upside, while the larger formation remains within a wedge-like pattern.




The High Yield Corporate Bond Fund came through again as it made new highs confirming a higher low and a higher high. That's a bullish trend and a bullish chart, and that's a plus for the stock market.




The AGG (Bonds / F-fund) was relatively flat as it seems to be running into some overhead resistance from its multi-month trading channel.



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

Tom Crowley


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