TSP Talk Blog

August starts off with a pretty broad rally with both large and small caps moving sharply higher on the day. The Dow gained a healthy 236-points with 2 stocks up for every 1 in the index. Large tech continues to lead the equal weighted market indices however, but unlike Friday, this time those small caps got involved and kept pace with the Nasdaq.

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One red flag yesterday was a sharp negative reversal in Apple, which could be a tell. It was up 2.5% on the day, but it closed more than $10 of its intraday highs. I would have to think that any topping action in the large tech stocks could be a warnings for the market which has relied on these stocks to keep the rally going. Perhaps it is just looking toward those open gaps created last week, like Amazon did on Monday.




Amazon was down on the day, another possible red flag, but the chart shows that there was an open gap that needed filled, and it could be just be coming down to test the top of that bull flag again, which it had broken out from on Friday.




So, some possible red flags, but it would just take another positive day or two to wipe out that theory. Aside from those issues and some other possible internal weaknesses we see, the index charts are staring to show major breaks above serious resistance, and it's tough to fight that.

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The S&P 500 (C-fund) made a new multi-month high yesterday as it broke above the July highs with yesterday's rally. It's not shown, but we all know about the large open gap that was created in February, which is near 3328, and that would be the next target on the upside, and potential resistance. That is about 1% above yesterday's close. Other than that potential roadblock, the breakout looks very good on the chart. Internally, there may be some concerns, however.




The DWCPF (S-fund) put together a great day and that's quite a reversal and rally off of Friday's lows. It's the highest close since February as well. 1565 is where the top of its February open gap lies.




The EFA (I-fund) bounced back and despite the wild day for the dollar, regained most of Friday's > 2% loss.




UUP was up sharply early on Monday, but it started to fade as the day wore on, and it closed flat on the day. Not the best sign for this already beaten down dollar.




The High Yield Corporate Bond Fund did the opposite of the dollar as it was down early but battled back to close slightly positive. The rising trading channel remains intact, and that's a green light for the stock market for now.




BND (bond ETF / F-fund) was down slightly on the day but the trend is still very much intact and rising.




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

Tom Crowley



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