TSP Talk Blog

Stocks were down to start the new week as the Dow shed a modest 55-points on Monday, with larger percentage losses in the broader indices. The positive open made it a fairly good candidate as a negative reversal day, which means some potential weakness early today, but the momentum has been so positive and it's been tough to keep this market down. Small caps lagged.

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According to sentimenTrader.com the S&P 500 ETF fund, SPY, hasn’t had a day like Monday since last November, when it opened in the top 20% of its intraday range and closed in the bottom 20%, with a negative close after hitting a 52-week high.

General Electric was a drag on the market as it tumbled over 6% after some major rating downgrades. It is a Dow component and we haven't had much bad news when it's come to stocks so we'll see how investors, and particularly, the trading programs react.
Today is the 24th and this time during the busiest week of earnings season tends to see some profit taking.


Chart provided courtesy of www.sentimentrader.com


I got back from my vacation late Monday and I appreciate all of your patience as I was a little behind on some emails. We ended up taking another day since we spent so much time driving and not enough site seeing, so we spent an extra day near the Redwood Forest and the vicinity. Very much worth it.


The SPY (S&P 500 / C-fund) made a new high in early trading on Monday but it steadily drifted lower all day and closed near the lows. Something we haven't seen in a while. The modest loss did nothing to break the rising trend.




The SPY doesn't have one but the chart of the S&P 500 did have an open gap created on Friday, and yesterday's action nearly filled it. We have always said that open gaps tend to get filled sooner than later, but over the last year that hasn't been the case as there are a couple down below - with the next closest being below 2470.




The DWCPF (small caps / S-fund) filled its open gap after the failed bull flag breakout. It's still above the rising support line so no harm except that it did create a negative outside reversal day formation, and that can be trouble.




The EAFE (I-fund) has been drifting lower from its recent highs but it is still very much in a rising trading range. This is a narrowing range so that could pose a problem for it, but as long as it stays above support it remains in good shape.




The AGG (Bonds / F-fund) is now between the 100-day MA and the 50-day EMA and I see this as the battle for bonds. If it falls below the 100-day MA I wouldn't want to be in the F-fund, but it may need to get back above the 50-day EMA before bullish bond traders get comfortable again.




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

Tom Crowley


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