TSP Talk Blog

The S&P 500 made another attempt to breakout over the February highs on Thursday, but the bulls came up a little short again as they may be running out of steam. However, the bears haven't done much with this double top opportunity they've been given. Something is going to have to give soon. The Dow lost 80-points while the Nasdaq, our S-fund, and the I-fund were the winners. Bonds tumbled for a 5th straight day.

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he market feels a little tired, but it has come such a long way over the last several weeks and months, that eventually it will take another break. The double top looks like an obvious spot for a pullback, and I know I have been saying that it may be so obvious that it could be a trap, but it has now stalled for three days at the February highs. The bears aren't doing much about it either, yet.

The broader market and equal weighted indices aren't worried about new all-time highs right now, and this chart shows that they are just dealing with trying to overtake the June highs. The February highs are still 8% away on this chart.




The bond market is starting to look interesting because yields spiked up again, but they're running right into potential resistance. Bond prices and the F-fund go up when yields come down so the question is whether the resistance line will push yields down again?

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The S&P 500 (C-fund) stalled again in another attempt to make a new all-time high. It's been a tremendous run and I wouldn't be overly surprised if it did make a new high, but it also looks a little tired and a breakout could be a last gasp effort from the bulls just to get it done. If we do get a pullback, I don't suspect it will be huge, but filling some of those gaps and testing some prior resistance lines or moving averages might provide a good rest for the market, giving it potential strength for another leg higher later.




The year to date chart shows that double dose of resistance near 3400. If it does breakout, it could be quite strong giving what it would take at this point to move above resistance. Perhaps a dip down to the bottom of that rising channel first would give it the strength it needs?




The DWCPF (S-fund) made a higher high but unlike the S&P 500, it still has more room above before making a new high. It remains in a pretty strong ascending trading channel and seems to perk up every time there's selling in the overcrowded Nasdaq stocks.




The Dow Transportation Index had been on a roll all month but it finally slowed down a bit in the last couple of days. It hit the February high and backed off on both Tuesday and Wednesday, but after any pullback it could make another attempt at the January high. The question is, what kind of pullback should we expect?




The EAFE was down but but the I-fund was given a small gain and the chart managed to hold above the old resistance line for another day. That's a good sign for now, but falling back below that would be a failed breakout and that could lead to a test of the lower support.




BND (Bond ETF / F-fund) took another hit on Thursday and fell all the way down to the 50-day EMA after being at new highs just 5 days ago. As I said, I think bonds may have peaked (and the 10-year yield made its lows) but a relief rally here wouldn't be a surprise.




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Thanks for reading. Have a great weekend!

Tom Crowley


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