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Yields rise again, investors ignore this time

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Stocks rallied on Wednesday as the Dow gained 63-points, which is a gain of 0.25%, but the broader indices did much better and each index had varying degrees of gains with the S&P 500 gaining 0.41%, the Nasdaq gained 0.63%, while the Transports gained 0.82%, and the Russell 2000 small cap index gained 1.0%. Our small / mid cap S-fund gained 0.73%.

Daily TSP Funds Return

The varying gains aside, it seemed more like a technical rally to me because, after filling last week's gap on Tuesday, the S&P 500 made short order of filling Tuesday's gap yesterday. Often the top of a filled gap can act as resistance so the bulls need to follow-through on yesterday's gains quickly, or the bears may pounce again.

The 10-Year Treasury yield moved higher yet again yesterday, this time hitting 3.1% just at the close, but as concerned as investors seem to have been on Tuesday with those rising yields, they dismissed the move yesterday. That just goes to show that it isn't so much the 3% that is the problem. The problem is the market is stuck between the January highs and the February lows and investors are just not sure exactly what to do.

The S&P 500 / C-fund filled the open gap, as we mentioned above, and it is trying to repair itself technically after breaking above the longer-term resistance line last week and finding support so far at that same line on this week's pullback . The half way point between the February low and the all-time high made in January is at 2703 and so the bulls and bears continue to battle for which way this is going to go. Every time it goes above that line, the bears pull it back. Each time it has fallen below, the bulls are there buying. Technically there is a good case for either side so this is getting a little tough to know which direction the next 5% move will be.

The S-fund broke above that resistance line again as the Russell 2000 small caps index (not shown) actually closed at a new all-time high yesterday. This is a good sign but the possibility of a double top is still in play.

The EAFE / I-fund was down as the pressure from the rising dollar has been too much.

The High Yield Corporate Bond Fund was up slightly on the day but it is dealing with Tuesday's breakdown from what looks like a bear flag, and yesterday's rally hit the bottom of the flag where it is meeting some resistance.

The AGG (Bonds / F-fund) had another bad day as the breakdown from its bear flag continues to play out. At some point this will be oversold enough to play, but the trend is clearly down.

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:

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

Tom Crowley

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SPY (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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AGG (F Fund) (delayed)

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