TSP Talk Blog

Stocks faded toward the end of the day on Friday but still closed with modest gains. For the week the TSP funds were mixed with the C-fund picking up a small gain, the S-fund had a small loss, and the I-fund had a big week leading the way. Bonds were up moderately. Momentum still favors the bulls but the Transportation Index posted a big negative reversal day on Friday that we'll have to keep an eye on.

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Alcoa reports 3rd quarter earnings on October 18 and despite some reports already coming in, traditionally it marks the unofficial start of earnings season. That gives the market a catalyst that has some teeth in it, although recently all investors seem to care about is whether a tax cut is coming their way - or the way of corporations, which of course would be a big deal. As economist Larry Kudlow says, earnings are the mother's milk of stock prices so they are the key, but a corporate tax cut and / or a tax reparation would have the same effect by boosting companies' bottom line.

I'm still trying to have some kind of vacation but I will be posting something every day, although it may be brief some days. Thanks for your patience!


The SPY (S&P 500 / C-fund) remains in a small "F" flag like formation, something we've seen before in recent months. If you were a day trader you would look at those and buy the bottom of those flags, and sell the top and be flat (no position) by the end of the day. But you must keep in mind that they do eventually break to the downside, so they are dangerous. Once they break there tends to be a rush for the exit. It doesn't have to be a major decline. Instead it will seek support and support is getting a little thin up here.




The DWCPF (S-fund) has been moving sideways to slightly lower which is a basic definition of a bull flag formation. It will be interesting to see if the bottom of that channel will hold if tested, because there has been virtually no pullback after that big run higher.




The Dow Transportation Index has been running along at a pace that seems unsustainable. On Friday it posted a large negative outside reversal pattern so this will be a big test for the market leader since reversals tend to continue for at least a short while longer, but if this one does continue, that thin support will likely be broken.




The EAFE Index (I-fund) had a good day on Friday but with a bit of a negative reversal there. It's above a rising wedge formation, which usually break down, so we'll see if the upside breakout can hold this week.




The AGG (Bonds / F-fund) rose sharply on Friday filling two open gaps (blue) while opening another near 109.60. The downtrend may have been broken as it closed at its highest level in 5-weeks.




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

Tom Crowley


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