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The bears are still hibernating

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Stocks waffled at the open but caught a bid by late morning and the bulls continued to put the pressure on the bears who were absent once again, and the indices closed with slight to moderate gains. It was the lightest trading volume day of the year if we exclude the pre-holiday days before Memorial Day and the 4th of July. The Dow gained 26-points and the Nasdaq led on the upside.

Daily TSP Funds Return

The market leading Dow Transports and small caps and were up slightly but just north of flat. The energy sector is trying to hold onto a recent rally as pulls back to test the old descending resistance line, looking for support, but it is back below the 50-day EMA.

The SPY (S&P 500 / C-fund) closed at its highest level but continues to trade in a very tight range. Closing at a new high with volumes at extreme lows makes it less convincing, so we'll wait to see which way this wants to break. We are seeing many clues that the market could move lower, but we just haven't seen anything act on that yet - except maybe the Dow Transports.

According to "Monday was the first time - ever - that the most popular ETF in the world, SPY, recorded a 52-week on the lowest volume in a year when it wasn't near an exchange holiday. Of the 21 times it hit a new high on the lowest volume in three months, it continued its rally over the next week 8 times (a 38% win rate), averaging -0.4%. Price patterns have become less reliable in recent months, however, as we've seemed to enter a close-your-eyes-and-buy environment."

The DWCPF (small caps / S-fund) were up slightly as it struggled to try to push back above the 20-day EMA on Monday. The 50-day EMA has held again, which is a good sign, but we're seeing the a potential bear flag forming as it trades near the rising support line.

The Dow Transportation Index was up slightly as it tested the top of its recent descending trading channel.

The EFA (EAFE Index (I-fund) hangs near all-time highs but as we've said repeatedly, the weakness in the dollar has helped greatly as the charts in Europe look for support from recent declines.

The High Yield Corporate Bond Fund is off its recent highs - creating a small bear flag looking formation so we're look for this to possibly help give us more clues on direction for stocks.

The AGG (Bonds / F-fund) was flat by the close on Monday and it closed below that failed breakout level for a second straight day.

Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to:

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

Tom Crowley

Posted daily at

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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)