TSP Talk Blog

Stocks opened sharply lower on Wednesday and it was the second straight day where stocks opened near their lows of the day, only to be bought up by the dip buyers. Also like Tuesday, there was a bit of a fade into the close, but nothing that would trigger a negative reversal day. On the contrary. It didn't feel all that comfortable, but technically it was another positive outside reversal day for the S&P 500 as it opened below Tuesday's lows, and made a higher high above Tuesday's highs, and closed near Tuesday's high. The Dow gained 116-points on the day.

Daily TSP Funds Return More returns

An announcement out of the Whitehouse that tariffs on autos would be delayed for six months helped turn the negative open around so we are still living with the headline / tweet driven market.

Despite the decent outcome, the 50-day EMA held firm as resistance so the bulls won the day yesterday, but they need to take out that 50-day EMA to win the little battle it is in between the 50 and 100-day EMAs. That will be the key going forward - who can win the battle to break one of those EMAs first, the bulls or the bears. While that plays out, there's the risk that a bear flag may be forming.




Small caps were up but lagged bit and as usual the S-fund closed with a gain between that of the Russell 2000 and the S&P 500. Bonds were up as the yield on the 10 and 30-year bonds were testing recent lows. The I-fund was up and created a large positive outside reversal formation, but the dollar held it back slightly.

Cisco reported earnings after the bell. Not the market mover it once was, but it jumped up on the report helping the futures move higher before they closed, but that small gain has turned fairly flat when they opened again.

---

The S&P 500 (C-fund) rallied, stalled at the 50-day EMA, and is forming a bear flag in the process. This is not yet a "gimme" bear flag because another rally to the upside would negate it making it look more like a "V" low. But it would have to get above that 50-day EMA to get to that point. There's a lot of support in the 2800-2815 area, and it really needs to hold for the bulls to stay in the game.




The DWCPF (S-fund) is in a similar situation with the 200-day EMA being the key support. There's a possible bear flag, but it's early and it can also be negated with a rally above the 50-day EMA.




The Dow Transportation Index did sneak back above the 200-day EMA yesterday, but as you can see in the chart, the 200-day EMA isn't as big of a factor, technical analysis wise, as it is on many of the other charts. It seems to overshoot before reversing.




The global growth concerns are showing up daily in the bond market as yields continue to move lower. The 10 and 30 year bond yields are testing 52-week lows, and the no deal on tariffs isn't helping that - unless you're in the bond fund (F) where you'd be enjoying the price appreciation in bonds.




The weekly chart of the 10-year yield shows the vulnerability of a breakdown with little support below. If there's a positive here for the stock market it's that the Fed may be getting more dovish viewing this, perhaps feeling the need to stimulate growth again with a rate cut. Also, when bond yields get too low, stocks market returns can look a lot more appealing.




The AGG (Bonds / F-fund) has been the beneficiary of that weak global and U.S. economic growth as it hit a new high again yesterday.




The EFA (I-fund) was up modestly although lagged U.S. stocks a bit, but you can see that very bullish looking outside reversal day yesterday.




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: www.tsptalk.com/plus.php

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

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.