TSP Talk Blog

Stocks opened sharply lower on Monday as the market has now moved their focus to what Donald Trump is saying and doing, rather than the pro-growth agenda they had been buying on. The Dow lost 123-point, but after bottoming in the late morning, stocks spent the rest of the day drifting higher to close well off the lows. The moderately large final losses take a little away technically from the positive intraday reversal yesterday.

Daily TSP Funds Return More returns

We know stocks are always looking for a catalyst. One month it could be interest rates, the next it's Brexit and the Euro, then it may be the price of oil, gold, Japan, the election, etc. Right now the focus is on President Trump and what regulation he is tearing up, or executive order he is signing. Over the weekend the 90-day visa and refugee restrictions shook up the market as some companies got finicky about it posing a problem with hiring efforts.

The late buying on Monday makes me believe this may not be the problem some made it out to be for the stock market, but the market may have needed a break anyway, and this may have been the excuse. This may go on until the next catalyst presents itself.

The SPY (S&P 500 / C-fund) fell back into its flag / wedge formation, filling last Wednesday's open gap and creating another small gap near 228.50. It tested the bottom of the wedge and bounced convincingly as it tried to fill that open gap.




The DWCPF (S-fund) also gapped down dramatically and it did end the day with losses over 1%, but closed off the morning lows after rebounding from a short-term rising support line.




The Russell 2000 small cap index is the key index for small caps and it has been lagging this year. However, there is a ton of support near yesterday's lows where the 50-day EMA is crossing several support lines. If these don't hold, I would say something is very wrong.




The Dow Transportation Index pulled back sharply falling early to the rising support line we talked about yesterday. The 20-day EMA held as well so for now, this is just a healthy pullback.




The EFA (I-fund) pulled back but more importantly fell below the rising wedge and the bottom of that open gap (blue, which is now filled), while creating a new open gap. The 59.50 to 59.80 area may now be the resistance levels to watch.




The AGG (bonds / F-fund) was down slightly and remains below key support levels.




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. We'll see you back here tomorrow.

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.