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Bonds' turn

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Stocks were slightly lower on Thursday and the Dow shed 14-points. The losses were mostly muted but once again the market opened higher, but failed to hold onto those early gains. Small caps lost some early moderate gains but held on to close slightly positive.

Daily TSP Funds Return

As we talked about yesterday, pension funds may be rebalancing and because the losses were minor, perhaps the worst of the reallocation is over after Wednesday's sell-off in stocks. Yesterday may have been the day to move toward bonds for those pension fund as they had a good.


The SPY (S&P 500 / C-fund) was fairly flat on Thursday and is trying to hold onto the support from the 20-day EMA. The pennant formation did give us the fake-out followed by a breakdown, but now the bulls are putting their hope in the possible bull flag (dashed blue). The PMO indicator just fell below its moving average and that's not a good sign, but often when that happens it becomes a short-term oversold buying opportunity. It's the second crossover is usually more serious.




The DWCPF (S-fund) still looks like a bull flag is fully formed. If it can't hold the 50-day EMA will be looming.




The Nasdaq 100 hit and found support at the 20-day EMA which coincides fairly closely with the old highs that it had a difficult time getting over for months. Old resistance can act like support during a pullback and so far it has held on its first test.




The EFA (I-fund) broke down from its bear flag on Wednesday but bounced back with a little help from a decline in the dollar on Thursday. Just like old resistance can act as support during a pullback (see DWCPF above), old support, once broke, can act as resistance. So the bottom of that flag is the test for the EFA.




The High Yield Corporate Bond Funds are still hanging around the all-time highs but have not been able to make a clean break. I suspect the end of old year / beginning of new year could trigger either the breakout, or a complete failure that will have it test the middle of the head of the large inverted head and shoulders pattern (red). No, it's not Mickey Mouse. We have a rare double inverted H&S with a smaller H&S within a larger one.




The AGG (bonds / F-fund) broke above its descending channel yesterday. Whether it was pension funds moving to bonds or just bargain hunting into the oversold bond market, this is a short-term good sign for bonds and the F-fund. The 50-day EMA may prove tough to get above, and the 200-day EMA may be impossible if this bear market resumes in bonds in 2017.




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. Enjoy your New Year holiday weekend and we'll see you next year!


Tom Crowley


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

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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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