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Mixed market as small caps outshine the larger indices

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Stocks were mostly lower on Friday with the Dow falling 100-points and most indices fading into the close posting small to moderate losses. The small caps were the outlier as they posted a solid gain to make it the only positive TSP Fund, outside of the G-fund, to post a gain (+0.20%) for the week.
Daily TSP Funds Return

The Transportation Index was down over 1%, which is a concern since it is a market leader, but we are seeing a variety of chart patterns from various indices - so will the real market direction please step forward?

The good news for the market is that later this week is one of the strongest seasonal advantages that we have during the year, but while the chart below contains 62 years worth of data, you can see that it's a bit dated as it ends in 2011 and I haven't run the numbers for after 2011. So we're looking at a trend of over 75% positive returns for Wednesday and Friday (half day of trading), but that still means that 25% of the time they are down, so there's no guarantees, and this year we have seen many trends and tendency being torn to pieces so who knows what this means to us, particularly since many indicators are still flashing warning signs?


Chart courtesy of www.sentimentrader.com


The SPY (S&P 500 / C-fund) popped back on Thursday from a minor pullback but it could not follow-through on Friday with more upside action. The pattern looks familiar as we've seen a series of lower lows followed by new highs. There's a small open gap below from Thursday's open, and that could be what is holding it back. With this being a strong seasonal week, toward the end of the week anyway, it would seem very possible that we could see new highs by the end of the week, but there are always obstacles that could prevent the probable.




The DWCPF (small caps / S-fund) led the way on Friday with a solid gain and the megaphone pattern keeps on keeping on. There is an open gap near 1284 so keep that in mind as a possible target.




The Dow Transportation Index was the laggard on Friday, giving back most of Thursday's gains after failing at some descending resistance. Being the main market leader, this is a concern.




The EAFE (I-fund) was up slightly as the dollar was down about 0.3% on Friday, giving it an advantage over the U.S. stock funds.




The High Yield Corporate Bond Fund has rebounded from its recent sell-off but it is still struggling, so far, to move back above the 50-day EMA, which is of course a technical roadblock.




The AGG (Bonds / F-fund) was up on Friday while the Dow struggled. It has started a series of lower highs and higher lows so I suspect, barring any major market events, that it will trade within that narrowing range for a little while.




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


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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S&P500 (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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