TSP Talk Blog

Stocks were doing just fine for most of the day yesterday, but at about 2:30 PM ET President Trump said that he planned to announce his decision on the Iran nuclear deal today, and that triggered some selling in the energy stocks, which pulled the market down with it. The Dow, which was up about 200-points in early trading, ended the day up 95-points, which as actually nearly 100-points off the lows as it had dropped to the break even point after that announcement. The late push higher put the indices about half-way between the highs and the lows of the day by the close.

Daily TSP Funds Return More returns

Oil, which hit $70 a barrel yesterday for the first time since 2014, started to see a "sell the news" reaction after Trump's announcement, and the strong rally we saw in oil and the energy sector started to reverse. You can see that we actually had a breakout from a beautiful bull flag yesterday, but once the profit taking kicked in, most of the gains had been evaporated.




So, we'll get Trump's decision on whether the U.S. will remain in the Iran nuclear deal. This announcement is coming a little earlier than expected so most are assuming it's a decision to get out of the deal, which the oil market had expected, hence the recent rise in price. But will things go back to normal - oil resumes its rally - after today's announcement, and will stocks use that as an excuse to continue what it had left on the table yesterday? The market seems to be able to be pushed around too easily right now so I'm not overly confident, but as long as support holds...

Treasury yields were up slightly yesterday but there was no technical edge either way, and they continue to trade in a tight range below 3%. That may be why investors moved their focus to energy.

Admin Note: If anyone is interested in our free annual Player's Championship Golf Tournament Pool, please click here for more info.

---

The S&P 500 / C-fund posted modest gain although it closed well off the afternoon highs because of the late sell-off in energy stocks. It closed just a few cents above the 50-day EMA so the pullback off the highs yesterday was significant in that it looked like it was going to be a strong technical breakout, but that was reversed by the close. So we have some positives but you can see that the chart is still entwined in myriad of support and resistance lines that investors are trying to decipher.




The small caps / S-fund continue to outperform the large caps having broken above its short-term resistance and the 50-day EMA last week, but it hit a bit of a wall at the longer-term resistance line.




The Dow Transportation Index lagged yesterday, perhaps because oil had hit $70 earlier in the day, but that 20-day EMA is just holding it back right now so it may need a catalyst to break its recent downtrend. We do know that the 200-day EMA has been a rock of support, and that must continue.




The EAFE / I-fund was up but the dollar was moving higher yet again so it was held back a bit. The 50-day EMA is holding and that still looks like a bull flag so it may just be a matter of time for the I-fund - if the dollar would ever slow down.




After testing the February lows for a couple of weeks, the Chinese Shanghai Index finally showed enough strength to push back above the 20-day EMA. I had been concerned about what could happen to U.S. stocks if this had broken down, but so far it has held.




The AGG (Bonds / F-fund) was down slightly with yields inching up. The bear flag is still very much intact and it looks like it's ready rollover again, but as I mentioned yesterday, a surprise relief rally could be due. I'm not sure I'd play it, but it could impact the stock market.




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.