TSP Talk Blog

It's getting difficult to write these market summaries lately, without sounding like a broken record, but once again stocks got stronger as the day went along. The difference yesterday was that we finally saw a little bit of selling in the broader market indices despite the Dow being up for a 9th straight day gaining another 33-points.

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The S&P 500 and Nasdaq were down just slightly but small caps and the Transports saw some moderate losses. But clearly investors, traders, program trading, or a combination of all of them, are buying the slightest intraday dips as stocks continue to close near their highs of the day.

Many short-term traders might tell you to ignore the indicators and just take what the market is giving you. That makes sense but it helps if you don't have a limit on the number of trades you can make. When you only get one opportunity to buy each month like we have (with one or more sells based on our TSP limits), it may not be wise to buy when the market is at an all-time high after a 10% rally. So, if you are not in stocks it's probably best to be patient.

On the other hand, as I mentioned the other day, if you have reaped the rewards of this rally you might want to consider taking some profits. We don't have any limit on the number of transfers that we can make if you are moving money in to the G-fund. You can do it all at once, or a little each day. It's always better to sell for a profit when you can, rather than wait until you have to or after you've given some back.
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The SPY (S&P 500 / C-fund) was down slightly coming off of the new highs made on Tuesday. That gap opened Tuesday morning should be a target, as most gaps usually are. Even that gap from November, which looks like a distant memory, will likely get filled at some point. It doesn't have to be any time soon, although most gaps get filled quickly, but when they don't get filled within a few days then we have to look over our shoulder for months or even years at that gap as a potential downside target.




The DWCPF (S-fund) was down 0.40% yesterday and again there is an open gap at 1210. There are a few gaps on this chart as well that I didn't mark, and probably won't unless that old resistance line near 1200 is broken again.




The Dow Transportation Index was down nearly 1% on the day but it found some support at the bottom of what may be a bull flag. This actually looks primed for a breakout as it tests the old highs again after consolidating for almost 3 months.




The EFA (I-fund) remains in a rising wedge formation despite closing near its recent highs, and there's also a rising trading channel, the top of which is being tested now. I wouldn't be surprised if this pulls back a little on Thursday.




The price of oil has really been consolidating after over a year of wild swings. It has been sitting in the $52 - $54 range since December but looks poised for a major move, most likely higher. I assume this would be good news for the stock market because it will likely mean that demand is rising and demand rises when the economy grows. We'll see, but what we wouldn't want to see is it move back below $52 as far as the economy is concerned.




The AGG (bonds / F-fund) was up and remains in a large wedge that could hold for a while.




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

Tom Crowley


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