TSP Talk Blog

Stocks ended the month of May with small losses on Tuesday, but it was a very productive day for the bulls as steep early losses, which filled the open gap on the S&P 500, recovered to close well off the lows. The Dow gave up 21-points with most major indices closing within a narrow 0.10% of break-even on the day.

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The small caps posted a small gain, finally outperforming, but still rather flat. The dollar broke down from its bear flag, but bounced back from early losses like stocks.

The positive reversal day could bode well for stocks heading into Thursday since that kind of momentum tends to rollover into the next trading day, but it would have been more impressive if the indices closed closer to the highs of the day. It is a new month and while the start of a new month can be a mover, it can also be a turning point for trends.

We get the May Jobs Report this coming Friday. Estimates are looking for a gain of 185,000 jobs and an unemployment rate of 4.4%.

Next week we get some congressional testimony that could have an impact on stocks. Other than that the action has been slow and the dog days of summer seems to have come a little early this year.


The S&P 500 (C-fund) posted a nice kangaroo tail reversal yesterday after falling early to fill its open gap, then rallying off those lows. It closed back within what looks like a bull flag and at this point it looks like the bulls may be able to call the shots, except so far they haven't been able to despite the bears not doing much to stop them. That 240.50 area held as support so far, and that's the key area for now.




The DWCPF (S-fund) also had a major positive reversal day after breaking down below that bear flag and the 50-day EMA again, but closing back above it. It has been a tough battle for the small caps but perhaps yesterday's action is the start of something positive? The trend is still down - unless yesterday's low marks another higher low.




The Dow Transportation Index ended the day flat but it was an eventful day as it tested and held above the 50-day EMA. There's a lot going on here. Overall the action seems negative but yesterday's big positive reversal certainly helps.




The EFA (EAFE Index / I-fund) was up slightly as the dollar helped by breaking down again.




The UUP (dollar) broke down from its second bear flag yesterday despite closing strongly.




The AGG (Bonds / F-fund) continues to show unusual strength. The yield on the 10-year in about 2.2%, which seems very low and why stocks would seem like a better option for investors, but if you compare that to the yields overseas it's actually quite good, so perhaps it's the international investors that jumping on our bonds?




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

Tom Crowley


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