TSP Talk Blog
Fed testimony starts today, after a mixed day for stocks yesterday
by , 07-10-2019 at 01:11 AM (1062 Views)
Stocks opened sharply lower on Tuesday but caught a bid right away and drifted higher the rest of the day on light volume. It was a mixed day for sure with the Dow and Transports down on the day, while the Nasdaq, small caps, and the S&P 500 all finished with gains. The FAANG type stocks led and the Transports broke below some key levels that we've been watching.
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There was some optimism in the trade negotiations yesterday as communications continued, and that helped with the late push higher, but it wasn't enough to help the Dow, which was held back by a 2% decline in 3M. That is three negative days in a row for the Dow after testing the prior highs from back in 2018. A double top pullback does not have to be dramatic, although it can be.
The action was rather slow as investors wait on the Fed and earnings. As a reminder, today we'll get the FOMC meeting minutes, and today and tomorrow Federal Reserve Chair Powell will give his Senate testimony.
Here's some info on the TSP's upcoming withdrawal changes.
TSP is now hosting a webinar dedicated solely to the upcoming withdrawal changes:
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Your New TSP Withdrawal Options:
Monday, July 15, 2019 at 8 PM ET
Thursday, July 18, 2019 at 8 PM ET
Tuesday, July 23, 2019 at 7 AM and 1 PM ET
Tuesday, August 6, 2019 at 10 AM and 1 PM ET
Thursday, August 15, 2019 at 10 AM and 1 PM ET
Additional Webinar Topics Include:
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Intro to TSP: Thursday, July 25, 2019 at 10 AM ET and 1 PM ET
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The S&P 500 (C-fund) opened below Monday's and last Friday's low so it was a bit nerve-wracking for the bulls to start the day, but these light volume trading days can be pushed around fairly easy and the bulls did just that. The chart is in a rising trading channel right now and that could go on a while, but that could also be considered an "F" flag (an Oscarism) and they tend to eventually break down hard, so it's a bitter sweat trend right now. The old high held as support yesterday, but that open gap (red box) may still be a lure.
The DWCPF (S-fund) had a decent day despite just small gains in the Russell 2000 small cap index. Biotech stocks did well and may have helped the midcaps. There's a nice looking bull flag in that rising channel, but the double top is looming just overhead.
The Dow Transportation Index took an unexpected turn after having closed above the 200-day EMA for six straight days. The 0.74% loss pushed it back below the 200-day EMA, and as you can see in those red circles, it has often had a hard time staying above it for very long this year.
The I-fund was hit hard because of a rally in the dollar, and the late rally in U.S. stocks. The most significant development is the breakdown below the prior high after falling below the rising support line last week.
The price of oil was up while copper was down but both of these charts do not look very good. Oil remains in a downtrend after failing at the descending resistance line, and it also has a bear flag forming. Copper looks to be creating a head and shoulders pattern and that 2.60 area needs to hold or it could get ugly.
Of course these commodities can reflect economic strength or weakness so that's why there's a concern here. According to the New York Federal Reserve, the chances of a recession in the next year is now about about as high as it has been since before the 2008 recession.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
AGG (Bonds / F-fund) was fairly flat yesterday but that's day three below the rising trading channel. There's a lot of open air below before hitting the next support level. Does the bond market think the Fed may be rethinking a rate cut in July?
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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