TSP Talk Blog

Stocks opened lower on Wednesday although it was a mixed bag as the Nasdaq and small caps stayed green most of the day while the Dow lagged and closed down 22-points, off the 87-point early loss. The S&P and Nasdaq closed very strongly and at the highs of the day creating some nice intraday reversals bars on the charts.

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Retail stocks continue to struggle while tech continues to lead, and after the bell yesterday we saw Netflix post a big earnings number which could help those big tech stocks in the Nasdaq 100 again today. But the big question coming up is going to be about the bank stocks and we're waiting to hear from them in the coming days. They could be the key to the next move in stocks.


The SPY (S&P 500 / C-fund) slipped early yesterday but again bounced off the 20-day EMA. I keep repeating myself but this is a decent chart formation but the longer the bulls take to try to breakout, the more the bears may be willing to put some real pressure on. This isn't quite a bull flag anymore but more of an "F" flag, but I guess that is debatable. Bull flags tend to breakout while "F" flags eventually break down, although "F" flags can also move within the slightly rising range for quite a while before breaking.




The DWCPF (S-fund) is more of a bull flag than and "F" flag, but bull flags generally have a slight downward slope so it's not a perfect example. It's somewhere between a bull and an "F" flag.




The EFA (I-fund) pulled back yesterday and has now broken down from that rising wedge formation. Again, the open gap is going to be a luring force like gravity.




The Financial / banking stocks have also been in a sideways flag-like formation but they broke down on Tuesday and bounced back to the bottom of the flag on Wednesday. Waiting on earnings from some of the big financial institutions seems to be a cause of the consolidation in the market. This mini breakdown may be a bad sign if it doesn't bounce right back soon.




The AGG (bonds / F-fund) dipped sharply back to the 20-day EMA. It may be that the bond market relief rally is ready to fade again.




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

Tom Crowley


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