TSP Talk Blog

Stocks opened the week with a gap higher and while the indices wavered some during the day, the Dow and S&P 500 climbed back by the close to finish close to the intraday highs. The market leaders that we have been a little worried about, the Transports and small caps, had strong days but they closed off their highs and remain in or below their bear flags.

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We actually saw another gap open on Monday morning on the S&P 500, which makes three open gaps on the chart, and that's almost unheard of. The S&P closed above 2400 for the first time, and the Nasdaq also closed at a new high.

Oil continues to rally off of the recent lows as we get closer to the peak driving season, but the WTI oil chart hit the 50-day EMA and backed off giving back almost half of the larger early gains.





The S&P 500 / C-fund gapped up creating a 3rd open gap on the chart, which is really something unusual. The "exhaustion gap" back in March created a peak but the post-French election gaps have been largely ignore, which is rare. Now we have a third small open gap on the chart. The question is, can the S&P make a new leg higher without filling any of these open gaps first?




The DWCPF (S-fund) ran up to the top of the bear flag before pulling back again. It did close with a solid 0.74% gain and closed back within that bearish flag after that one-day close below it.




The Dow Transportation Index rallied yesterday but ran into some resistance at the 20-day EMA. It's early, but this could be yet another bear flag forming (dashed).




The EFA (EAFE Index / I-fund) moved up yesterday and the dollar's weakness helped push it toward new highs again.




The AGG (Bonds / F-fund) held above Friday's breakout level and above the open gap. It could be a bullish flag breakout and the support areas that need to hold for bonds to stay bullish is the 50-day EMA and the lower end of that open gap.




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

Tom Crowley


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