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Tech stock earnings strong after hours

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Stocks were mixed on Thursday with the Dow gaining a respectable 71-points while the S&P 500 gained 3, or 0.13%, and the Nasdaq was down on the day, but that could change today as earnings reports after the close yesterday were better than expected. Small caps did well but a rally in the dollar held back the I-fund.
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There was a plethora of earnings reports coming out after hours yesterday and most of the major tech names like Amazon, Alphabet (GOOG), Intel, and Microsoft all reported strong earnings and were up in after hours trading. We saw a modest rise in the futures, particularly the Nasdaq futures, and the question now becomes whether this will be the start of yet another leg higher for the market indices, or if we'll start getting some "sell the news" profit taking.

There has been a lot of good news over the last week with the budget passing in the House yesterday pushing tax cuts a little closer, the earnings have been strong, and economic data has been solid, but over the last week or so the indices have been rather flat and the Nasdaq actually hit a 17-day low yesterday. Of course that could change after last night's earnings reports.

Let's take a quick detour to discuss what had become a great concern for those under the FERS retirement plan. There was a budget being discussed in Washington that would have eliminated the TSP's supplemental leg of the 3-leg retirement system. Yesterday the budget passed in the House of Representative but DID NOT include these cuts, so the supplemental leg, which is the off set payment that you get if you retire before you are eligible for Social Security payments, is safe for now: More on that from federalnewsradio.com.


The SPY (S&P 500 / C-fund) was up slightly yesterday but didn't do much to add to the positive reversal day on Wednesday. That could be a warning sign but it will depend on how investors react to last evening's strong earnings report - sell the news, or put the petal to the metal again?





The DWCPF (small caps / S-fund) has been moving sideways to slightly lower over the last few weeks, which could be a bull flag, but it also broke below its rising support line so there's arguments for both sides. Bull flags are strong formations but a break in support is usually a tell.




The Dow Transportation Index gained nearly 1% after Wednesday's big loss. It is also forming a form of bull flag after breaking below its sharply rising support line. The lower high it made does have us on a "top" watch so the bulls will want to see a move above 10,000 to eliminate that kind of talk.




The EAFE (I-fund) was down and with the overseas markets doing well, it was all due to the strength in the dollar yesterday.




And here is the chart of the dollar which seems to be back in a rising trend, which could be a breeze in the face of the I-fund.




The AGG (Bonds / F-fund) filled one of its open gaps yesterday before reversing back down. It's probably due for some relief but its in a downtrend and as I mentioned the other day, the rallies will likely get sold quickly now - unless there's some major change in the economic picture.




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.

Tom Crowley


Posted daily at www.tsptalk.com/comments.php


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