TSP Talk Blog

Stocks opened lower after weak retail numbers were released, but the dip buyers didn't take long to do what they do, and we saw a sharp late morning rally after some accommodating words from one of the Fed governors regarding the Fed balance sheet. For a second straight day however, there was some late selling to take the indices off their highs, and in the case of the Dow and S&P 500, into negative territory. The Dow lost 104-points. Small caps and the Nasdaq were up.

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This rally has remained resilient and it seems the more folks are calling for a peak and a pullback, the more stubborn the rally becomes, but earlier in the week it felt like we had some capitulation from the bears after the 370-point rally in the Dow on Tuesday, and since then the indices have been mostly treading water.

Whether that finally turns into a pullback or not remains to be seen. We're seeing some extremes in the indicators suggesting we're due for a pause, but others are actually contradicting it suggesting the rally could continue. That may mean some chopping around but the index charts do have some issues because of those overhead 200 day averages, and if we are going to see any selling, this may be the time of the month for it to happen...

Chart provided courtesy of www.sentimentrader.com


President's Day Holiday Monday: From www.tsp.gov: "Some financial markets will be closed on Monday, February 18 in observance of the Presidents' Day holiday. The Thrift Savings Plan will also be closed. Transactions that would have been processed Monday night (February 18) will be processed Tuesday night (February 19), at Tuesday's closing share prices."

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The S&P 500 / C-fund created spinning top candlestick formation yesterday, and that's a potential reversal type of pattern. It's at the 200-day average, and the top of a possible right shoulder of an inverted head and shoulders pattern, so in a perfect technical analysis world we'd probably see a move down near 2550 - 2600 to fill in that right shoulder before another move back to the neckline. It's rally a perfect world in the stock market, however.




The DWCPF (small caps / S-fund) is just below its 200-day SMA but holding above the rising support line.




The Financials saw a negative reversal day above the 200-day EMA on Wednesday, and that led to more selling a break back below the average on Thursday.




The EFA (EAFE Index / I-fund) was flat, the dollar moved slightly lower, and there's a good sized gap that may need filling. This could be an inverted H&S patters also, as we're seeing on many charts, but we'll see if that 50-day EMA can hold the pullback to a minimum.




The AGG (Bonds / F-fund) continues to trade in that wedge-like formation. It is near recent highs but those wedges can easily breakdown eventually.




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Thanks for reading. Have a great holiday weekend!



Tom Crowley


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