View RSS Feed

TSP Talk Blog

Stocks rally, but internals still struggling

Rate this Entry
Stocks gapped open higher on Monday, and the key was that it held. Often a Monday morning gap will get filled quickly and the market losses the rebound momentum, but not yesterday. The Dow closed off the highs of the day but still managed a nice gain of 135-points. The broader indices performed even better with 1% to 1.6% gains in most of the other major indices.

Daily TSP Funds Return

The dollar rallied and that helped small caps outperform with a gain of 1.24%, while the I-fund lagged a bit.

Surprisingly, there were more new lows made yesterday than highs on the combined NYSE and Nasdaq list. That's highly unusual given how close the S&P 500 is to all-time highs. This could be a warning sign, although not necessarily something that means stocks will stop going up right now.

I suspect this market is now on a news headlines watch as the tensions with North Korea backed off some, but it is still in the air and could be escalated at any time.



The SPY (S&P 500 / C-fund) showed once again that the 50-day EMA is the place to buy. At least it was last Thursday when it tested the EMA and we saw a nice rebound since. Does that mean the downside is over? If the past is any indication than that's a good possibility, but as I said above, we're seeing some internal weakness with more new lows made yesterday so this may not be a cut and dried outcome.





A closer look at the SPY shows the open gap created on Monday. We've seen these kind of breakaway gaps before that led to large rallies, but they do tend to get filled eventually, although it's interesting that the bears could not fill the open gap from July on the recent pullback.




The DWCPF (small caps / S-fund) led with a nice gain and with the dollar rebounding it helped outperform the large caps for a day. The trend is still down, and that 50-day EMA can be tough to get back above once below it, but that open gap near 1230 could be an upside target if the rally can continue.




The Dow Transportation Index broke down from a bear flag last week but yesterday's action puts it right back in the flag after rebounding sharply off the 200-day SMA. The 50-day EMA is in the way now and the question is whether that means the flag is going to hold here and push it back to the bottom.




The EFA (EAFE Index / I-fund) had a good day but the rebound in the dollar held this back a bit. Still, the 50-day EMA held very well for a third time this year.




The Volatility Index pulled back sharply so investors showed they are less concerned about volatility, but the 12.3 current reading is still relatively high compared to recent historic lows, and it is still above the 200-day EMA.




The AGG (Bonds / F-fund) was down slightly and it continues to be rather muted despite the large movement in the stock market recently. Overall, it's above resistance and in a rising trading channel so it looks fairly bullish.




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: www.tsptalk.com/plus.php

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

Tom Crowley


Posted daily at www.tsptalk.com/comments.php


The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

Submit "Stocks rally, but internals still struggling" to Digg Submit "Stocks rally, but internals still struggling" to del.icio.us Submit "Stocks rally, but internals still struggling" to StumbleUpon Submit "Stocks rally, but internals still struggling" to Google

Comments


S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes