TSP Talk Blog

Stocks were almost dead flat by the close on Friday but the 75 cent gain in the S&P 500 made it a 7th positive close in a row. The Dow slipped 3-points on the day and no matter you slice it, it was a light volume slow day for stocks.

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That kind of dull action is what we might expect heading into a holiday weekend. With many on Wall Street spending the weekend getting their summer homes ready or just returning from a vacation, the action could remain slow today - unless something stirs things up, of course, but expect trading volume to be on the low side again. There's also the post holiday reversal possibility after the rally into the holiday.


The SPY (S&P 500 / C-fund) was actually down a couple of cents although the S&P 500 was up slightly. There was a gap open on Thursday which leaves an open gap on the chart. It also hit the top of that blue rising parallel trading channel. Any time the trend is rising the bulls have the overall advantage, but there is a chance that the path of least resistance is now on the downside, although there is some support between 240.50 and 241.




The DWCPF (S-fund) reversed on Friday creating a positive reversal day after falling below that old bear flag in early trading. The 20-day EMA seemed to hold as support, but how much of that was the positive pre-holiday bias?




The Dow Transportation Index broke above its descending resistance line on Thursday and Friday, moving above the key 50-day EMA. But again, how much of that was just positive biased pre-holiday action? It needs to hold that old resistance line early this week.




The EFA (EAFE Index / I-fund) has stalled a bit since the dollar rallied off the recent lows.




The dollar rallied last week and that was probably overdue. But again, the holiday is over so the prior trend could resume. Another open gap (blue) was filled but there a few still overhead (red).




The strong action in gold in May could be from the weakness in the dollar but we watch gold for sign of investors moving to the safety trade. On Friday it rallied up on a strong dollar. The gap up on Friday could have been holiday related, and if that is the case it would reverse back down this week. Otherwise we may want to put this on the watch list.




The price of oil rebounded after Thursday's major sell-off. The big sell-off came after OPEC cut production less than expected so supply remains high. It remains below the 50-day EMA and if the broader market wants the energy sector to participate in the rally, the price of oil may need to stabilize here.




The AGG (Bonds / F-fund) remains in that bull flag which looks primed for a breakout - if it doesn't try to test the bottom of the flag first. But like gold, we have to wonder why we'd be seeing breakouts in the safety trades.




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

Tom Crowley


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