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Slow, slow, slow

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Stocks slipped on Thursday as the Dow shed 77-points with modest to minor losses in the broader indices. Once again the double top is holding as resistance but the bears are not putting any pressure on the bulls, so we're having a bit of a standoff rather than a pullback.

Daily TSP Funds Return

After dozens of 1% moves in the first few months of the year, we haven't had any 1% moves in the S&P in the last two months. Trading volume has also dried up with the last two days having the lowest trading volume of the year for non-holiday shortened trading days.

So far the political mess hasn't given the market any trouble as the indices shook off the initial negative reaction to the Michael Cohen guilty plea, but yesterday we saw a China related tariff headline take the indices sharply off their morning highs, so that seems to be the concern for the moment.

Fed Chair Jerome Powell speaks today in Jackson Hole, WY and investors will be listening for clues on his take on the economy and interest rates - the other more immediate major concern going forward since there is an FOMC meeting in September. Then there's a potential government shutdown deadline looming later in September. After all of those trials and tribulations it will be time to focus on the mid-term elections and the polling leading up to it.

So, the market certainly has some catalysts in front of it, but it doesn't seem to be looking too far ahead right now.

Here's a reminder of the seasonality surrounding Labor Day Weekend. The data is old (1950 - 2011) but it is 62 year's worth.


Chart provided courtesy of www.sentimentrader.com




The S&P 500 / C-fund dipped again as it stalls at the old highs. Volume was very light over the last two days and as we get closer to the holiday it may get even lighter. There seems to be more room on the downside given the trading channel, but the bears are still missing in action.




The small caps (S-fund) made another new intraday high but stalled at its rising resistance before pulling back and creating a negative reversal candlestick.




The Dow Transportation Index was down meaningfully for a second straight day after its negative reversal at the old highs. There's rising support near 11,200 so I'd look for that to be tested soon.




The EAFE (I-fund) pulled back sharply after the dollar found its footing again and rallied. The chart filled one small gap on the pullback (blue) but there are several still open (red) in the neighborhood.




The VIX was down early but found support in that 11.50 - 12.00 area that we have been watching (in the Plus Reports), and closed up slightly.




The AGG (bonds) chart was not available for some reason so I am using the chart of the 10-year Treasury Yield. The yield is nearing the bottom of its recent three month trading channel so we'll have to see if that 2.8% area will hold on the downside. If it does, bonds and the F-fund may resume their downside.




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. Have a great weekend!

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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Comments

  1. userque's Avatar
    You may want to consider BND for an AGG substitute if needed in the future. They [B]strongly[/B] correlate for charting purposes.
  2. tsptalk's Avatar
    Quote Originally Posted by userque
    You may want to consider BND for an AGG substitute if needed in the future. They strongly correlate for charting purposes.
    Thanks. I had that one on my list but hadn't been checking it.

    Looks like neither are very consistant with the F-fund but BND may be slightly better.

  3. userque's Avatar
    [B]Full Disclosure[/B] :) I compared them both (TNX and BND) against AGG, rather than the F-fund. While BND is sloppy next to the F-fund, it's nearly a perfect match (correlation-wise) to AGG ... [B]much [/B]more than slightly better then TNX. And since we can only use the AGG for T/A charting purposes, it seemed logical to use that as the benchmark, rather than the F-fund.

    Also note, you compared percentages. Percentages aren't really correlations. For example:

    Imagine an Underlying and its 3x bull ETF. We'll call them UND and ETF. They are perfectly 'correlated.' When UND moves 1%, ETF moves exactly 3% in the same direction.

    Your analysis would show that the percentages don't 'match.' However, they are 100% correlated. The T/A done on one would exactly match the T/A done on the other.

    This is what's needed for charting purposes. On the other hand, if you were looking for something to match the [I]actual percentage moves[/I], then that would be a different animal.

    This is probably a critical distinction when finding a replacement for AGG with regard to [B]chart T/A[/B].

    [B]Fun facts:[/B] I ran a correlation search over nearly all stocks and etf's (not indicies). IEF and UST are listed as 2nd and 3rd best correlated (Under BND). TNX wasn't in the top 20 :( I then ran a line chart comparison (%-wise) to visually see that they not only are correlated, their %-scales are the 'same.'

    I'd be curious to see your analysis comparing BND and TNX to AGG :)

    [QUOTE=tsptalk;bt9208]Thanks. I had that one on my list but hadn't been checking it.

    Looks like neither are very consistant with the F-fund but BND may be slightly better.[/QUOTE]

S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes