TSP Talk Blog

Stocks rallied on Thursday and for the first time in a while, they closed going in the same direction as they had opened. The Dow gained 182-points on the day, which sounds great, but the broader indices saw even larger percentage gains.

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Small caps shined, financials were up but struggled, and oil was down, but copper saw the biggest move with a 3% dive yesterday apparently because of the tariff implementations. Copper tends to be a good barometer for the economy but obviously this one is more trade related than a indicator of the strength of the economy.




We get the June Jobs Report today (Friday) and estimates are looking for a gain of 192,000 jobs and an unemployment rate of 3.8%.

It's been a short, yet exhausting week because of the big moves, the whipsaws and reversals, and that doesn't play well with our 2 IFTs per month, so let's hope next week brings with it a more stable trend that doesn't have us running on emotions.

Seasonality is on the bulls' side next week but in a week or so that positive bias turns into the summer doldrums.


Chart provided courtesy of www.sentimentrader.com

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The S&P 500 / C-fund had a solid gain yesterday and while we are looking at some potential bearish patterns forming with a possible bear flag and head and shoulders pattern, the action in April shows that a consolidation near the lows does not always produce a breakdown. It made its way back above the 50-day EMA yesterday while heading into a strong seasonal period over the next week or two, so I'll give the bulls the nod here. The open gap near 2750 could be an upside target and while the top of an open gap can prove resistive, the head and shoulders pattern is not necessarily a bearish pattern while stocks are in an uptrend, and being above the 50-day EMA is a big step toward being in an uptrend.




The small caps (S-fund) moved above its bearish looking flag but as we've mentioned, a similar looking flag led to higher prices in April so perhaps there is some more room to run here. The top of the open gap and the top of that blue dashed parallel trading channel are the next levels of resistance to watch.




The EAFE Index (I-fund) had a big day with the dollar moving lower. We were watching two open gaps below the 200-day EMA and one was filled on Tuesday, and now the EFA is confronting the second. Whether or not this can get back above the 200-day EMA is questionable, but I'm looking for the open gap near 67.70 to be filled soon.




I was getting a little concerned about the High Yield Corporate Bonds, but yesterday's rally took it back above the 50-day EMA and now the chart looks OK for the short-run. The rally was steep enough yesterday to rule out a bear flag for now, but I suppose some weakness in the coming days could change that.




The AGG (Bonds / F-fund) moved higher yet again as yields dip and the yield curve flattens even more. I still think the open gap near 105.80 is due to get filled, but bonds always seem to have a mind of their own regardless of the technical analysis.




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Thanks for reading. Have a great weekend!

Tom Crowley


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