TSP Talk Blog

Stocks were mixed yesterday with tech stocks rocked by the disappointing earnings out of Apple, one of the bellwether earnings reports each quarter. The Dow was up 30-points despite Apple being one of the Dow 30 stocks, but financial stocks did well holding that index in positive territory. The small caps have been lagging and their chart is in need of some help - quick.

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The S-fund lagged again and as you will see below, the bear flag on that chart has now broken and it is now in jeopardy of breaking down from a more serious support area.

The SPY (S&P 500 / C-Fund) has now closed below the 50-day EMA in 11 of the last 12 trading days, but it clings to the long trading range that it has been in since July - closing in on 4-months. A consolidation is not generally a bad thing, but of course the bottom of the range has to hold. The bear flag and trading below the 50-day EMA are a couple of reason not to trust the support of the bottom of the range, but the bulls have been resilient this year, time and time again. Let's see if they are ready to make their move.




The weekly chart of the S&P 500 has been holding up above some key long-term support areas of the old highs, but the recent descending trend looks a little ominous - especially considering what happened during the prior downtrends, near prior highs.




The DWCPF (S-fund) fell below its bear flag and is now clinging to the September lows and the bottom of its 4-month range. It is entrenched below the 50-day EMA and very vulnerable. The bulls may take this as an opportunity to buy low again, but the chart needs to hold now.




The Dow Transportation Index gapped lower and temporarily fell below the 50-day EMA but it rallied back to fill the gap before settling just above the 50-day EMA. This chart is in slightly better shape than those above but the buyers have not jumped on this pullback yet.




The Nasdaq 100 (QQQ) gapped down after Apple's weak earnings report. It was able to fill the gap intraday before closing just north of some short-term rising support. If this can find some footing here, there's no harm in this chart, although the rising wedge isn't usually a good sign.




The AGG (Bonds / F-fund) is rounding out its right shoulder in a bearish looking head and shoulders pattern. I'm not a fan of bonds here.




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

Tom Crowley


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