TSP Talk Blog

It was another tug-o-war between the bulls and bears yesterday as the Dow escaped a triple digit morning loss to close up 114-points. The intraday peaks were made near noon ET, when the indices started to drift a little lower into the close. Volume was light again because of the final day of Rosh Hashanah yesterday, so we could see trading pick up today.

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There were no trade / tariff headlines to speak of yesterday so we saw the large caps make up some of the ground they lost over the prior two trading days. That has been the pattern; trade concerns - small caps outperform. No trade worries - large caps outperform. But so far each tariff tantrum has been met by dip buyers.

Despite the solid gains we saw, the internals continue to look slightly weak. For example, the Nasdaq was the leader gaining 0.61% yesterday, which is a very good day, but there were actually more stocks on the Nasdaq Composite down than up on the day.

The small caps barely participated in the rally and speaking of small businesses, the U.S. Small Business Optimism Index hit a record high of 108.8 yesterday, which is a good sign for now, but as RevShark pointing out in his commentary yesterday, these kind of lofty positive readings tend to come closer to the end of a bullish market cycle. In 1983 the market peaked about four months after the prior record high of 108.0 in that Optimism index, and didn't revisit those highs until until 1985.

Apple will unveil some new products today and in the past we've seen some sell the news reactions there.

We have a large hurricane heading straight for the Carolinas. As devastating as they can be, the market doesn't normally react much to them. Stay safe, all of you who may be in the path! It looks like a bad one.

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The S&P 500 / C-fund gave the bulls a little scare yesterday after it started the day by giving back all of Monday's gains, and made a lower low on the chart. But before you could say, "what's happening" it started to rebound again, and lately the pattern has been that we see the U.S. indices rallying after the European markets close. The positive outside reversal day is usually a good sign for the short-term, and while we see some potential warning signs internally, as long as the bottom of the rising channel is holding, the bulls would appear to be in charge.




The small caps (S-fund) lagged yesterday but also had a positive reversal coming back from some stiff early losses. There is still room on the downside with support being down near 1465, but unless this is a small bear flag forming, I'd assume it will go up if the rest of the market is going up.




The EAFE (I-fund) was up slightly and remains above some key support and possibly due for some relief, but the larger trend is still down.




The Nasdaq had a big day posting a big outside reversal day as it held above the bottom of its channel again. The reaction to Apple's new products later today could shake this up, however.




The Yield on the 10-Year Treasury is inching closer to 3.0% again. It broke a descending trendline so it looks inevitable. The question is, will investors start locking in 3% yields instead of buying stocks while the stocks market has been getting a little overpriced?




The AGG (bonds) pulled back with yields rising and it's testing the 200-day EMA, but that moving average hasn't been much of a factor on this chart, as you can see. It has moved freely above and below it for a while now. It may be more important that it is below that rising wedge formation.




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

Tom Crowley


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