TSP Talk Blog

Stocks opened modestly higher on what turned out to be a slow Monday, as we head into this week's G-20 and scheduled trade meetings. The early gains faded and the indices closed mostly lower although the Dow ended with a small gain of 8-points. Small caps and the Transports continue to get hit hard, and so far only the Dow and S&P have made new highs, so the broader market is lagging.

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This is the post options expiration week I was talking about and while I expected a more negative bias this week compared to last, it wasn't as bad as I would have expected given how stretched the S&P 500 had gotten after hitting the double top last week.

A trade deal and all bets are off as far as a breakout for the Dow and S&P 500, but as you'll see in the charts section below, most of the other major sectors are still below their old highs so the broader market may not be as healthy as the Dow and S&P right now.

Not much more to report after the light volume trading day in a market that appears to be on hold, so let's make this quick today.

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The S&P 500 (C-fund) dipped slightly yesterday and remains below the new highs it made last week. It looks like a double top and sounds like a double top, and at this point only a positive move in the trade negotiations is likely to stop that this week.




The DWCPF (S-fund) had a bad day, following up on Friday's selling after breaking below that steep rising support line. It's still above the key moving averages so it's tough to be too bearish looking at the chart, but the fact that it is lagging the large caps in an environment that looks to be cutting interest rates is concerning since small cap companies thrive on credit.




The Dow Transportation Index is also lagging badly and yesterday's 1.5% sell-off pushed it back below the major moving averages with authority. This market leader is not providing much confidence.




Here's a few more sectors that are lagging those new highs of the Dow and S&P 500 - we have the energy sector, the financials, and even the Nasdaq all below their April highs, and after the run they've had, they may all be ready for a breather.




The EFA (I-fund) is actually performing well, with a lot of that having to do with the dollar falling again, but like the S&P 500, the EFA is back below the May highs and it could be a failed breakout.




The AGG (Bonds / F-fund) was up and it filled the open gap from Friday's selling. The yield on the 10-year Treasury is still flirting with falling below 2% but bond prices may be due for a break, although the trend is clearly up and the trend traders seem to want to continue to push higher.




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


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