TSP Talk Blog

Stocks traded in a tight range again on Wednesday, ending the day flat to slightly higher in most indices. The Dow gained 15-points and the bears will have to wait for another day for the pullback they have been waiting for to buy.

Earnings season is basically behind us, Greece has a 4-month extension on their bailout, and the Fed said interest rate hikes are not likely any time soon, so the question is, what will be the catalyst for stocks going forward? Perhaps oil? There's not much happening and there's a saying on Wall Street... Don't short (bet against) a dull market. Is that the situation we are in?

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The I-fund and S-fund picked up about 0.2% and bonds posted a small gain.

The SPY (S&P 500 / C-fund) was down slightly yesterday but the sideways to slightly higher action is keeping the November comparison alive. There is an overhead resistance line, but it is rising. It looks like there is a lot more room on the downside right now, but in the last few years we've seen these types of slow inclines go on for a longer than seems reasonable.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The weekly chart of the S&P 500 shows there is more room on the downside but there is still some room on the upside of the long-term rising trading channel -perhaps as much as 50-points. This rally may want to test the top of the channel before peaking.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The Wilshire 4500 (S-fund) was up slightly and there's no change to the slow grind we are seeing. This type of action is tough to trade. Everyone who is out and wants in is waiting for a pullback, and anyone who wants to sell may have already done so. That's basically what we're seeing... a waiting game with a slightly positive bias. How long can the bears wait?


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

Oil went back above $50 a barrel yesterday after spending a day below it. This is another positive for stocks but it's obviously teetering on that $50 level and could go either way.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The EFA (EAFE Index / I-fund) continues to rise. Sentiment is getting quite bullish for the I-fund after a year in the dog house, but like the other indices, investors may be waiting for a dip to buy and the I-fund isn't cooperating. Once people get impatient and start chasing, we'll probably get that pullback.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk

The AGG (Bonds / F-fund) was up again yesterday following through on the rare bear flag breakout to the upside. The rising support line seems to have held so far and the Fed's delay in raising rates may be able to keep the yield of the 10-year Treasury below 2% (it's now 1.97%) after being above 2% for about two weeks.


Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk


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

Tom Crowley


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