TSP Talk Blog

IBM was up close to 9% yesterday and that accounted for much of the 160-point gain in the Dow on Wednesday. The more broader indices like the Nasdaq and S&P 500 were flat on the day, while the small caps, Transports and I-fund bounced back from some recent losses. Bonds pulled back while trying to hold onto its bull flag.

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The 160-point rally in the Dow saw it close above 23,000 for the first time but we do still see some divergences from the other indices. Volume remains very low for this time of year and according to sentimenTrader.com:

"Tuesday was another good example of the many oddities markets have displayed in 2017. SPY printed a 52-week high on a 52-week low in volume. The only other non-holiday that has happened in 24 years was August 7 of this year, right before the “massive” 2.4% pullback. The S&P and Dow both hit new highs even as breadth was negative both days. That’s only happened twice in 55 years (April 16, 1964 and March 20, 1995). The intraday ranges in recent weeks are ticking at or near record lows, yet implied volatility is rising. These oddities typically precede weakness, but 2017 has bucked so many historical precedents it’s hard to place a lot of weight on the idea that all of a sudden NOW it will matter."

I'm still taking some vacation time but I will be posting something every day, although it may be brief on some days. Thanks for your patience!


The SPY (S&P 500 / C-fund) peaked out above its F-flag yesterday but closed back in the flag so it continues. As I noted before and in the chart below, prior F-flags made similar fake outs to the upside before modest pullbacks - August's being more severe, but both were buying opportunities. The difference this time is that support is so thin now.




The small caps continue to move sideways and it is starting to look more and more like a bull flag, which is obviously bullish, but I keep looking at the size of the flag pole and think that more of a consolidation may be needed.




The Transportation Index had a good day on Wednesday after the sharp 3-day pullback. It is below that steep rising trading channel (blue) and may be forming a megaphone formation, but that doesn't tell us too much because they don't always break in the same direction - although there is some tendency for them to change the direction of the trend.




The EAFE (I-fund) was up with a decline in the dollar and the old resistance line held again as support. Rising wedges don't usually break to the upside so this recent move could be a fake out, but underestimating this market has been a common mistake this year.




The AGG (Bonds / F-fund) remained in a bull flag although it really needs to hold here at the 50-day EMA.




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

Tom Crowley
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