TSP Talk Blog

Stocks were wildly mixed on Tuesday as the indices reacted to the big decline in Facebook. The Nasdaq took the brunt of the losses while the Dow shrugged it off and gained 113-points. So investors weren't outright selling. They were moving money from one sector to another, and small caps were one of the beneficiaries yesterday.]

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Rather than talk about Facebook, which is now yesterday's news, there was another flood of earnings released after the bell yesterday and the results were mixed. Amazon was up slightly after hours but basically only got back what it lost in Thursday's trading. Intel was down, Starbucks was up, gaming giant Electronic Arts was down, etc. Most were good so we'll see how investors react today - whether they pile into the good ones or take profits.

The big news today will be the 2nd quarter GDP number. Estimates are in the 4% area, 4.1% to 4.3%. As we talked about the other day, a weak number could be trouble, but a very hot number, and some have estimates at 5%, could trigger interest rate concerns, so I would suspect that a mid 4% number, 4.4% - 4.5%, would be the sweet spot for the market.

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The S&P 500 / C-fund was down slightly yesterday after Wednesday's big rally. So that open gap from January and top of the rising trading channel has held as resistance, at least for a second day. Any chart that ends in the upper right hand corner is obviously bullish, but we can see the resistance and perhaps a pause is coming. There are open gaps below that always concern the bulls, and maybe a little cleaning up before we see new highs is possible.




Here's a close look at those gaps and the slightly negative reversal candle stick created on Thursday.




The small caps (S-fund) had another good day Thursday gaining 0.45%, so over the last two days it tried to get back Tuesday's big loss, and it almost has, but it continues to fail near the recent highs.




The Dow Transportation Index also had another good day and it broke above its bear flag, something that doesn't usually happen. There was a bit of a negative reversal there too, but a 0.84% gain and a close above the bear flag may negate that negative reversal's effectiveness.




The EAFE Index (I-fund) was down on the day as the dollar rallied back some. The 0.45% loss on the EFA doesn't match the I-fund price because of Wednesday's under-pricing.




The AGG (Bonds / F-fund) was down slightly and we may be seeing a little bear flag forming just above the 50-day EMA.




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Thanks for reading. Have a great weekend!

Tom Crowley


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