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More of same - sideways but no pullback yet

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Stocks were mixed while trading in another very tight range on Tuesday, and volume continues to evaporate. The Dow gained 40-points and briefly hit 23,000 for the first time. The S&P, which was down most of the day, closed with a small 0.07% gain. The Nasdaq was flat and the small caps, I-fund , and Transports were all down modestly.

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The last hour pushed the S&P from a small loss to a small gain so the buyers are still not going anywhere. This is likely the impact of program trading which has no emotion and will ride the trend and buy support until it changes. That support is getting thin, however.

Outside of the programs, the prospect of tax cuts and deregulation has had a profound effect on the mindset of investors and of course those on the sidelines are kicking themselves for missing out. But if that is your case, history is on your side because stocks do not go straight up forever, at least they never have in the past, but they do seem to move in one direction or another for much longer than seems reasonable.


The SPY (S&P 500 / C-fund) stayed in its F-flag which is coming near the apex of a small rising wedge formation. This usually doesn't end well, but this market has been an anomaly and the buy and holders are just fine with that.




The small caps continue to drift sideways to lower but there has been little pressure on the downside for an index that looks to be sorely in need of some consolidation after the recent gains. This kind of sideways action can pull it off of overbought levels but the support gets weaker along the way.




The Transportation Index has had a decent pullback since Friday's negative reversal day. It is still trying to hold onto the 20-day EMA after a brief break below it on Tuesday. There is some support just below 9800 but after that it gets weaker with only the 50-day EMA in any close proximity.




The EAFE (I-fund) was down after a decent rally in the dollar yesterday. It is trying to hang above its old resistance line, which has become support so far. The 68.70 area looks like a good place for a pullback should that old resistance line break. That's where the open gap meets some rising support.




The AGG (Bonds / F-fund) pulled back enough to fill its open gap from last Friday. The positive reversal day may help as it seems to be forming a small bull flag. The 50-day EMA needs to hold as support and a push back near 109.80 would be a big positive for bonds.



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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. The sun finally came out here in the Northwest, but it truly does rain here everyday. At least so far. Thanks for your patience!

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.

[/COLOR] Tom Crowley

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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.

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