TSP Talk Blog

Stocks started the new week with a sharp rally that was pretty broad in nature, although volume wasn't all that impressive given the size of the gains. The Dow gained 145-points, or 0.68%, while the recently beaten down Nasdaq led with a gain of 1.42%. But that Nasdaq chart isn't quite out of the woods just yet.

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This chart of the Nasdaq 100 ETF shows that he bear flag still exists and yesterday's rally merely sent it back to the top of the flag.




The financials participated in the rally, while the energy sector did not. Bonds were down, as was gold, so there was some "risk on" approach to the day.


The SPY (S&P 500 / C-fund) opened sharply higher on Monday, leaving an open gap on the chart in the process. It was a new all-time intraday and closing high for the index. The bulls grabbed back the momentum, but there is some potential rising resistance crossing yesterday's highs. You can see that volume was not all that impressive so the buying could have been some chasers who are afraid to miss out on a rally, and that could be anyone from the average uniformed investors, to a small hedge fund that needs to keep up with the indices.




The DWCPF (S-fund) gained about 0.8% yesterday and it may have some resistance to deal with before it can make a new high. It could be a bull flag formed but can it make new highs before filling that new large open gap?




The EFA (EAFE Index / I-fund) lagged slightly because of the rally in the dollar on Monday. The 67.0 level looks like the next interesting juncture for the international stocks.




The High Yield Corporate Bond Fund was up on the day, but not as much as we might expect on a day the Dow gained 145 and made new highs. This is a stretch at this early stage, but this is the 2nd day where this fund has underperformed, and whether it means anything remains to be seen, but it's a tiny yellow flag at this point. But if that small bear flag breaks through support, I think the stock market will get worried.




The AGG (Bonds / F-fund) was off slightly, and that's not too surprising given the interest in stocks yesterday. That open gap is still there for the filling but there is also rising support just above that gap near 109.75.




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

Tom Crowley


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