TSP Talk Blog

Stocks rode a bit of a roller coaster on Tuesday as the indices created bullish looking positive reversal days. The early strength was sold off, but the battle between the dip buyers and the sellers of rallies was won by the dip buyers in the end, and we saw saw decent gains across the board, despite only a 9-point gain for the Dow.

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Small caps led again as they are not / would not be as impacted as the S&P 500 if there was an issue with tariffs. We're a consumer driven economy, for the most part, and investors seem to be favoring the small businesses right now in favor of large caps to avoid companies that do more exporting, in case there is some sort of trade war.

After hours yesterday Gary Cohn, the top Economic Advisor to the president, announced his resignation and the futures headed south. The Dow futures were down over 300-points as I write this Tuesday evening, but we've seen this before. I'll believe this reaction when the opening bell sounds on Wednesday. I'm not saying stocks can't go down. On the contrary, I still anticipate a possible test of the February lows eventually, but we can't always trust the overnight futures to hold into the open.

We get the January Jobs Report on Friday morning and estimates are looking for a gain of 210,000 jobs and an unemployment rate of 4.0%. They would be impressive numbers if hit, but investors and the Fed seem more concerned with the wage numbers at this point.


The S&P 500 / C-fund was pushed into negative territory yesterday morning and found some support at the old familiar 50-day EMA, but it has been the 50-day SMA (simple average) that has been stealing the show lately as potential resistance. It is trying to make a higher low but it would need to get back above last week's high to make that official.




The small caps / S-fund did move above the 50-day SMA yesterday and they are leading the large caps to the race above last week's high, but it's a more volatile index and technical analysis doesn't normally play out as cleanly as the more heavily traded S&P 500 Index. Also, if the negative overnight futures hold, Tuesday's gain will be wiped out. But we'll see how that goes.




The Dow Transportation Index may be forming a small bear flag, and still being below the 50-day EMA and SMA, I'd have to give the nod to the bearish side for this chart.




The EAFE Index / I-fund has also been lagging, although it did gap up and hold for most part yesterday. It came close, and we may be able to call this a successful test of the lows, but like the Transports, being below the 50-day moving averages, it's tough to get too bullish here yet.




The dollar was down and that usually gives the I-fund a bit of a boost, compared to the U.S. stock indices. That wasn't the case yesterday but there are other factors involved including the I-fund's different trading times for the markets involved.




The AGG (bonds / F-fund) remains in a bear flag keeping bonds in a tough spot.




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

Tom Crowley


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