TSP Talk Blog

Stocks were mostly higher on Monday with slight to moderate gains in the three major indices as the Dow added 0.07%, the S&P 500 was up 0.28%, and the Nasdaq led with a gain of 0.71%. The Transports were also up slightly but reversed and closed at the day's lows. The Russell 2000 was down dragging our S-fund to flat on the day.

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It was a low volume trading day and while I'd say it's the summer doldrums kicking in, we know there is a plethora of earnings coming in this week and the Fed decision on interest rates is next Wednesday so it's more likely the calm before a possible bigger move.

Despite some decent gains in the indices yesterday, there was some internal weakness, and that's the premise of the Hindenburg Omen we mentioned yesterday. Not only were there an elevated number of new 52-week highs and 52-week new lows, but there were more stocks down than up on both the NYSE and Nasdaq, despite the gains.

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The S&P 500 (C-fund) had a decent day and given the late weakness on Friday, more selling to start the day seemed like a reasonable expectation, but instead, it held up well. The problem is, the rising channel broke down on Friday and yesterday's high was at the bottom of the channel, so it may now act as resistance.




The DWCPF (S-fund) has been holding above that 20-day EMA but it too recently broke its rising trading channel, and if you look at the prior channels, whether they were moving up or down, the break started a new trend.




The Dow Transportation Index was up slightly but like on Friday it closed off the highs creating another negative reversal day. It's trading above the 50 and 200-day EMA and remains in a rising channel so its tough to get too bearish, but short-term it looks like it wants to test the bottom of that channel again.




The EFA (I-fund) lagged a bit with more strength in the dollar. It had broken below its rising channel in early July, but the angle of incline was quite steep. Now it's in a slow slide which could turn out to be a bull flag.




The price of gold has been rallying recently, and this long-term chart going back to 2009 shows a major breakout above a 7-year trading range. The Fed has been looking to stimulate inflation with rate cuts, and the gold bugs like that, so like stocks, it is front running the Fed's dovishness. The dollar has been strong too, which would normally weigh on the price of gold making its move may be even more impressive. So, the safety plays of gold and bonds are rallying, while stocks are... also rallying? Doesn't something have to give? This would be a good situation where a gold TSP fund would be nice.




AGG (Bonds / F-fund) rallied early, finally filled that open gap, and pulled back a bit. Now that the gap is filled we'll have to see if becomes resistance and a lower high, or if it's just a temporary pause on the way to new highs. But for now, the gap was filled, as we anticipated, and it acted as resistance as filled gaps often do.




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

Tom Crowley


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