TSP Talk Blog

Stocks rallied sharply early on Tuesday, but the gains drifted and they ended with modest gains, although the Dow ended the day down 6-points. The share prices below include Monday's sell-off and reflect the 2-day return.

Daily TSP Funds Return More returns

The I-fund saw a rebound, but the late selling in U.S. stocks may affect it negatively today. Small caps help up well with the Wilshire 4500 gaining nearly 1% on Tuesday, giving it a two-day loss of just 0.34%. Bonds were up on Monday and Tuesday giving the F-fund a big boost.

The SPY (S&P 500 / C-fund) is trading near the 200-day EMA and hopefully putting together a little consolidation near this week's lows like we saw other times this year (red boxes.) We thought we had this happening earlier this month, but the lows fell through. That's the key here - the lows need to hold (on a closing basis) and I'd say there's a good chance they will.


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

This weekly chart shows that the one-plus year long rising trading channel (red) has been penetrated and there may not be any strong support until the 170+ area. Now that doesn't mean we won't see a relief rally, but clearly there has been some damage done and this kind of decline is a longer-term possibility.


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

The Wilshire 4500 (S-fund) outperformed yesterday, which is a positive change, and this market certainly can use a change. The lows this week are the keys to watch. As longer they hold, the more likely a serious rebound is coming. This index is so far below the moving averages that the downside pressure should ease at least temporarily.


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

The EFA (EAFE Index / I-fund) is also trying to stabilize despite continued economic concerns in Europe. The 50-day EMA is now below the 200-day EMA, and that makes for a bear market in my book. But, it could actually snap all the way back to the 50-day EMA without coming out of a bear market, and that would be a pretty nice rally.


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

Crude oil has been plunging, and that is a mixed picture for the stock market. Oil prices fall when supply is up and/or demand is down, and if demand is down, that could be a reflection on a weakening economic picture. But low oil prices also mean more money in consumer's pockets, and that generally results in more spending by the consumer, which will help the economy.


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

The AGG (bonds / F-fund) rallied as investors opt out of stocks, but bond yields are so low that this is more of a safety play than a bet on bonds. I don't know how much higher bonds can go, particularly if stocks can rebound.


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


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

Tom Crowley


Posted daily at TSP Talk Market Commentary

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