TSP Talk Blog

Stocks caught a bid in early trading moving the indices higher but they peaked an hour or so into the session and headed south. There was a push high in the last hour of trading, but that only served to recoup some of the losses the indices incurred during the bulk of the trading day. The Dow ended the day down 55-points, while the small caps continue to lead on the upside.

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There has been this ongoing trend of healthy economic data, a stronger dollar, oil trading at multi-year highs, and that gives some concern to inflationary pressures, which has had the affect of pushing interest rates and bond yields higher. This translates into a quandary for investors. Strong economy, good. Rising rates, not so good for earnings.

So, we're watching the stock market trade between the January all-time highs, and the February correction lows. At least in the case of the Dow and S&P 500 because the small caps of the Russell 2000 have hit new highs. But with earnings season winding down the market is hovering and trading in a range waiting for the next catalyst and anything like a trade announcement from Washington, as we saw mid-day yesterday, could shake things up.

The 10-Year Treasury yield hit another new high yesterday closing above 3.1% for the first time

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The S&P 500 / C-fund was down slightly yesterday while continuing to digest the big gains off the 200-day over the prior week or two. The rising support broke like it did in previous pullbacks, and it is still near the top of a bear flag so the bears may have the short-term advantage right now.




The S-fund has been leading and closed for a second straight day above its descending resistance line. It too has come a long way in the last week or two so there may be some attempts from the bears to at least consolidate for a while, and at worst probably pullback into the large pennant formation.




The Dow Transportation Index had another good day on Thursday but it tested the top of its range again and pulled back creating a possible negative reversal day, similar to the prior peaks.




The EAFE / I-fund was up but it is still dealing with some resistance levels like many of the U.S. index charts.




The AGG (Bonds / F-fund) continues to slide lower after breaking down from its bear flag earlier this week. That large open gap could be a target for a relief rally, but the chart is broken and any rallies could be met with stiff resistance.




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Thanks for reading. Have a great weekend!

Tom Crowley


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