TSP Talk Blog

U.S. stocks managed to close out the week with a small gain on Friday making it 11 straight positive closes for the Dow as it ended the day up 11-points, and it needed a 90-point rally in the last hour to get there. The international stocks saw some stiff losses on the day but they may react positively on Monday to Friday's late strength in the U.S. market, unless something changes overnight.

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The 11 straight positive closes by the Dow is just one off the longest streak ever. In the last 120 years on 1987 saw a streak longer when there were 12 positive closes in a row. But nothing else in the 20th century. 1987 should ring a bell and it's interesting that the longest winning streak ever came during a year that later saw the largest one-day percentage drop in the Dow ever. It lost 22.61% on October 19 of that year. I'm not saying that is what coming, but eventual the market will exhale.

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The SPY (S&P 500 / C-fund) rallied late and closed well off the lows to post it's highest closing price of the year. The early loss nearly filled Tuesday's open gap, but not completely, and there's another gap near the old resistance line. Three down days in February with just two trading days to go. Amazing.




The weekly chart shows the breakout above the rising trading channel. We had a similar angle of incline in 2013 - 2015 but the current market has gone into another gear and there's been no significant pullback since October. The one breakdown in 2014 quickly snapped back within the channel so we'll see if the breakout to the upside reacts similarly, or if the top of that channel actually holds as support.




The DWCPF (S-fund) broke back into its trading channel early on Friday but it got a good bounce off of the 20-day EMA and closed right back above it. It's in a little downtrend at the moment so Monday will need to see a little positive follow-through to break that.




The Dow Transportation Index also had a big positive reversal day on Friday but also remains in a mini downtrend since peaking a couple of weeks ago.




The EFA (I-fund) finally broke down from that rising wedge that we had been watching. It hung in there for a week longer than I expected based on the chart, but now it must test the old support line to get back into the wedge.




The AGG (bonds / F-fund) broke above the 200-day EMA and the wedge formation on Friday. What this sudden interest in bonds means I'm not exactly sure. The U.S. 10-year Treasury is now yielding 2.32%, down from 2.6% a couple of months ago, but European 10-year bonds are at much, much lower yields, some negative, so perhaps that is causing overseas investors to opt for U.S. bonds. Bond yields go down as bond prices go up.




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


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