TSP Talk Blog

Stocks continued their winning ways on Friday as the Dow gained 184-points. The bigger early gains did erode some as the day wore on but by the close Friday's rally wasn't quite enough to push the S&P 500 into positive territory for the week last week. The small caps and the I-fund were able to turn positive for the week with Friday's gains.

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The market didn't seem to give a whit about the government shutdown. As a matter of fact it rallied dramatically during almost the entire event, so the fact that there's a temporary end probably won't mean all that much either. Perhaps the bulls, who have been in charge, can ride it for some continued momentum, but it isn't really much of a catalyst, particularly since the shutdown could start up again in a few weeks.

There are 13 (out of 30) Dow stocks reporting earnings this week with Apple being the keynote on Tuesday, and Microsoft on Wednesday, but several others that are capable of moving the market.

Apple has a history of downplaying their earnings expectations then later beating the estimates. We saw the first part of that play out on January 2nd when they gave an earnings warning that triggered a major sell-off in stocks on the 3rd. We will see if they surprise on the upside after the bell Tuesday, or if it's worse than they warned, which would be a disaster, but that would go against their typical modus operandi of warning, then beating.

Apple's stock has gotten back all of that big loss it took after their warning. It actually looks primed for another breakout from the consolidation so is it ready to finally make a move back to the 50-day EMA, or is the 158 area going to continue to hold as resistance?

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The S&P 500 / C-fund has cleared several hurdles during the rally off the Christmas Eve sell-off lows, including the 50-day EMA, but there's still a few to deal with and the 200-day EMA is not inconsequential with a double, maybe triple, dose of resistance near 2700.




The longer-term weekly chart shows a couple of significant resistance levels just below 2700, although so far prior resistance levels have been taken out rather easily.




The DWCPF (small caps / S-fund) slipped below the rising trading channel last week but got a solid bounce off of the 50-day EMA and has since moved back up to the bottom of that channel. It looks like the real tests here are in the 1335 - 1345 area.




The Dow Transportation Index is back up testing the 200-day EMA and hasn't let up much since its low in December. We saw a couple of false breakouts in November and to start December, so we'll have to see how it deals with that 200 EMA this time around.




This semiconductors headed into Friday with Intel's earnings miss and sell-off on it's shoulders, but in spite of that it was able to rally thanks to stocks like AMD and Nvidia moving higher on the day. The reason that is significant is because the semi's have now moved above their 200-day EMA for the first time in several months, and doing it on a day with Intel down is certainly a change from the days where Intel was king.




The AGG (Bonds / F-fund) was down on Friday but it was basically using the time to fill that gap it opened on Thursday. Bonds have been holding up well, which is interesting given the rally in stocks. You would have thought money would have been leaving the bond market during the stock market rally, but the recent pressure on economic conditions has kept yields low.




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

Tom Crowley


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