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Was that it, or more churning and burning left?

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Stocks opened lower again on Thursday, following through on Wednesday's severe sell-off. Dip buyers showed up and the indices stabilized and then rallied into positive territory after more news out of Washington. The Dow gained 56-points and we saw better bounces in the broader indies. But it might still be considered a "dead cat bounce" at this point. We need to see more upside follow-through.

Daily TSP Funds Return

I don't want to be diving into the political chaos everyday, and there's some who believe the market was looking for an excuse to sell-off (and fill those gaps) and the Comey news may have been the straw. The midday pop yesterday seemed related to some positive news for Trump but it was typical post sell-off action and again, just an excuse.

With internet and program trading the norm now, things do seem to play out faster than they did years ago, but the chart formations that worked then seem to work now. And some indicators work better than others in certain market environments but they still tend to work so nothing has changed except maybe speed.

The S&P 500 / C-fund has now filled all of its gaps on the downside, and now all eyes will be on the gap above. I am 95% sure that gap will get filled by the end of the year, but from a technical standpoint, the S&P 500 could have a little more work to do on he downside (maybe just some churning and burning) before rallying back up to that level. If there's a complete breakdown from here, then we'll have reevaluate and look into that other 5%, but for now, we're still in a bull market.

Now that the gaps are filled (on the downside) there's one more that remain open from last year's post-Brexit rally. OK, don't worry. I won't put it on the watch list unless the S&P falls below 2200.

The weekly chart filled that rare open gap this week but it is back below the top of the long-term trading channel.

The DWCPF (S-fund) broke down from its bear flag and it is now trading below the 50-day EMA, but there is a new open gap above the 50-day EMA. As far as bear flag targets go, this chart has already reached it. That doesn't mean it can't go lower, but this bear flag has been satisfied. I didn't post it today but on the Transportation Index chart we saw how one bear flag breakdown turned into the flag poll of a lower bear flag.

The EFA (EAFE Index / I-fund) was up a bit but looking at the important German DAX chart, it seems that a healthy pullback might have it testing at least the 50-day EMA, but of course there's that open gap, so the I-fund could be a little vulnerable, especially if the dollar sports some kind of relief rally off the recent lows.

The AGG (Bonds / F-fund) was down slight after Wednesday's rally and a big rally off of the 50-day EMA over the last week. There's two open gaps below and some resistance above near the recent highs.

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Thanks for reading. Have a great weekend!

Tom Crowley

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S&P 500 (C Fund)
DWCPF (S Fund)
Dow Jones U.S. Completion Total Stock Market Index (^DWCPF)
EFA (I Fund)
iShares MSCI EAFE Index (EFA)
AGG (F Fund)
iShares Lehman Aggregate Bond (AGG)