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Weathering the storm

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The market became very tentative heading into the weekend with the hurricane bearing down on the Southeast. There wasn't too much movement but you could also say that stocks held up well despite the imminent storm. On Friday the Dow gained 13-points while the other indices were mixed with weakness in large tech stocks, and strength in the Transports and the I-fund.

Daily TSP Funds Return

The dollar continued to slide helping the I-fund to lead the way, but otherwise there wasn't a lot of action leading into the weekend. As we mentioned last week, volume doesn't tend to improve much the week after Labor Day weekend, but starting this week it should pick up as summer vacations come to an end.

I am writing this just as Hurricane Irma is nearing the Florida Coast so I don't know anything yet about any damage done or losses, so I just hope any of you who were within her sights made it to safety somewhere.

As for the situation in North Korea, rather than the expected missile test to celebrate their government's 69th anniversary over the weekend, they threw a party for the scientists who were involved with the tests. I am only bringing this up because it does seem to have an impact on the price of stocks, at least short-term effects.

The SPY (S&P 500 / C-fund) hovered above the 20-day EMA last week, drifting slightly lower off the late August high. That could be a bull flag forming and with it remaining above the 20 and 50-day EMAs, it's tough to be too bearish, but we'll want to see how the action gets going now that we should see a pickup in trading volume.

The DWCPF (small caps / S-fund) look like they may have made a lower high, but like the S&P 500, the index remains above the 20- and 50-day EMAs and within a rising trading channel. That 1222 area is where we'll be looking for support to hold, otherwise the bears may try to sink their teeth into the small caps, which have rebounded nicely from the mid-August lows, but continue to lag the large cap indices.

The Dow Transportation Index has been holding up better of late but there is some resistance at 9400 that could come into play to start the week.

The Nasdaq 100 was hit hard on Friday and some of those large cap techs that have led the way all year like Amazon, Netflix, and the other FAANG stocks, seem to be struggling with poor chart formations. That said, there's another possible bull flag on this chart so we'll see if the buyers are still interested.

The EFA (EAFE Index / I-fund) made a new high on Friday, but backed off and closed rather flat, although the TSP gave the I-fund a nice gain for the day. Is this a false breakout with an eye on filling that gap? There seems to be continued strong support at the 50-day EMA.

The dollar remains in a downtrend and the downside accelerated to end the week last week, giving the I-fund a boost.

The energy sector had been rallying but it turned down on Friday after nearing the longer-term resistance line. Is this 9-month downside trend going to continue?

The AGG (Bonds / F-fund) was down on Friday but it is just a day off its recent highs. It looks strong, but I don't know exactly why. Is it a sign of a weakening economy r perhaps just a play on the weak dollar?

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

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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)