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Bulls and bears battling after pullback

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The Dow traded in a near 300-point range on Thursday being up as much as 157-points, and down as much as 135-points, but settled at +37-points as it was another day of fairly dramatic ups and down. The broader indices were mixed with the S&P down slightly, the Nasdaq down modestly, while small caps picked up a modest gain.

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The dollar fell sharply again lifting the I-fund, but pulling the bonds and the F-fund down. Earnings have been good but bonds have been a concern for the market as yields move to multi-year highs.

Here's the 10-year Treasury yield and you can see that momentum can continue for quite a while once it gets moving. But in 2016 and 2013, which saw the prior spikes, stocks did just fine. Remember, bond prices go down while yields are rising.




We're on pace for the first negative week in the Dow and S&P in 11-weeks, but of course the week is not over yet, and the bulls have had the momentum up until this point. The bears had an opportunity this week to do some damage, but they seemed to have balked here, and the bulls may not let this dip last much longer if those bears don't make another move soon.


The January jobs report will be released this morning (Friday) and estimates are looking for a gain of 180,000 jobs, and an unemployment rate of 4.1%.


The SPY (S&P 500 / C-fund) was down slightly again so the buy the dippers weren't too much of a force, but where are the bears who have been waiting for a pullback? There's a lot of room for this market to fall if the bears want it. So far they haven't gone for it.




The small caps / S-fund successfully tested the bottom of its rising channel, but the test is still underway.




The Dow Transportation Index found support at one of the weaker support lines (dashed) but the next major support may not come until the 10,600 area, so it probably needs to hold here.




The EAFE Index / I-fund bounced back with the help of the falling dollar, which has been doing a lot of the work for the international markets.




The dollar closed at its lowest level again - the lowest level in over 3 years.




The High Yield Corporate Bond Fund is testing some interesting support in what could be a bull flag. It closed below the 50-day EMA for a 3rd straight day so there are some strikes against it.




The AGG (bonds / F-fund) fell sharply again on Thursday and is testing the bottom of a descending trading channel. Ugly chart.




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. Have a great weekend!

Tom Crowley


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

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