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Slow day, but bears have small victory

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Stocks traded in a very tight trading range yesterday with the bears getting a mild victory. The Dow lost 44-points - somewhere in the middle of a narrow 120 point range of its high of +33 and low of -89. Yields slipped back down (bonds up) and that vote of economic weakness took the price of oil and copper down again, while a rally in the dollar weighed on the I-fund.

Daily TSP Funds Return


The Consumer Price Index (CPI came in just slightly lower than expected and didn't have much of an impact, although the morning futures did rise slightly and just temporarily. Remember, weak economic data is en vogue with the stock market clamoring for interest rate cuts. Any signs of economic strength would ironically cause selling at this point.

But weak data does hurt commodities like copper and oil whose demand decreases as the economy slows. If energy stocks are falling, then a piece of the indices are falling as well.




The yield on the 10-year Treasury also slipped on that slightly weaker CPI report and it looks like we have a bearish looking flag forming.




The financial sector did not appreciate that and the lower yields pushed the XLF financial ETF down 1% yesterday. So with energy and financial sectors suffering because of weak data, how long can the general stock market remain near its highs while waiting for the Fed to act?

The next FOMC meeting is Tuesday and Wednesday of next week. To cut, or not to cut? The market is waiting!




The S&P 500 (C-fund) broke below that insane angle of incline, which is no surprise, but the question is whether this will be a minor pullback - maybe a bull flag forming, or something more similar to what we saw last fall (see insert), which retested the lows.




The DWCPF (S-fund) held up well yesterday although did close with a small loss, and it is clinging to that support from the 50-day EMA.




The Dow Transportation Index gained a solid 0.47% yesterday but you can see it is still stuck below some key moving averages.




The dollar's strength yesterday accounted for some of the weakness in the price of oil, and now that a longer-term support line has been successfully tested, does that mean more weakness for oil and other commodities as the dollar makes it's way back to the top of the channel?




And of course the EFA (I-fund) is not a fan of a strong dollar as it pulled back sharply from its recent peak yesterday.




The AGG (Bonds / F-fund) rallied slightly on the dip in yields and after having pulled back slightly for a few days after hitting the top of that large channel, it looks like it may be trying to create a bull flag.




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.

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S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

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Yahoo Finance Realtime TSP Fund Tracking Index Quotes