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A light volume rebound

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Stocks rebounded modestly on Wednesday after Tuesday's big sell-off, but volume was light and there was a bit of a fade into the close. The Dow ended the day up 54-points or about half of what it had been up just an hour before the close. The broader indices also ended the day with moderate gains so the bulls did win the day.

Daily TSP Funds Return

The talk of a debt extension deal in Washington ignited things a bit and of course the possibility of a tax reform bill coming soon is keeping the bears from getting too aggressive. But we will be heading into another weekend with possibly two different hurricanes heading toward the east coast, and Irma looks like trouble. There's also the North Korea threat of another major missile test, so it's tough for the bulls to try to get too aggressive on the long side at this time as well.

After the close yesterday there was a pullback in the futures after word got out that President Trump was not likely going to consider Gary Cohn as the next chairman of the Federal Reserve. They came off the worst levels pretty quickly so it looked more like a knee-jerk reaction.
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The SPY (S&P 500 / C-fund) posted an inside day yesterday with the day's high and low between the prior day's high and low. I thought we might see that small gap get filled during the rally on Wednesday but it didn't quite make it and we have a threat of a possible double top pullback. It remains above the 20 and 50-day EMA so it's tough to get too bearish yet, but those hurricanes and / or North Korea could add some pressure to the market heading into the weekend.

The DWCPF (small caps / S-fund) was up slightly and as we speculated the other day, a pullback or sideways action could put it back within that rising channel, which is now a done deal. Now it needs to stay there.

The Dow Transportation Index was up solidly yesterday and we could look at this optimistically because of that potential bull flag forming, or pessimistically as we have another possible lower high forming.

The EFA (EAFE Index / I-fund) had a good day but it was a mixed message with EFA being up 0.62% while the actual EAFE Index was up just 0.07%. Of course the TSP gave the I-fund just a 0.08% gain, and that figures. The EAFE is the index it is supposed to track, but I'm not sure why the EFA was so much higher yesterday.

The High Yield Corporate Bond Fund is also threatening a double top here -- or it could just be a bull flag which would be a just a temporary consolidation. We'll see. Many chart are acting like this, where there's some good signs and some bad.

The AGG (Bonds / F-fund) was down yesterday as we saw yields move up off their recent lows. The trend is still up but it may be near the top of its rising range. That doesn't mean bonds have to come down since it can continue to hug the top of that rising channel, but a pullback to the bottom of the channel is always possible without breaking that rising trend.

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

Tom Crowley

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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)