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TSP Talk: Stock fall late on options expiration Friday

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Stocks were well on their way to breaking a 3-day losing streak on Friday, but a last hour jolt hit the market and the indices did a swan dive into the close. The Dow did close up 112-points, but that was 240-points off the highs, and the S&P 500 gave up a 30- point gain to close flat. The Nasdaq lagged losing 42-points, or 0.36%, about the same as our S-fund. The I-fund held onto a good gain bit the late selling on Friday may catch up to it in today's prices.

Daily TSP Funds Return
The late sell off on Friday may be a wake up call for the bulls, but it was also a little suspicious being that it was an options expiration Friday when we can see some late shenanigans by traders and hedge funds as option contracts expire. So I'm not totally convinced that it meant too much, but if the downside follows through early this week and the charts start to suffer, then we better take notice.

Retail sales blew estimates out of the water, which helped stocks rally early, but the retail sector did not survive Friday's late selling as the RLX Retail Index lost 1.24% on the day, also giving up a big early gain. Internals were mixed with declining issues modestly outnumbering advancing issues by about 3 to 2 on the NYSE, and it was more even on the Nasdaq, but advancing volume outpaced declining by about 5 to 3 on the NYSE, and it was just slightly negative on the Nasdaq.

The Dollar may be worth watching as we see the stock indices continue to move counter the move of the dollar. Notice the negative correlation over the last several months. The dollar started to bounce again last week sending stocks down, but now the UUP is up against the 50-day EMA, which will be an important pivot point for the dollar, and for stocks should the correlation continue.




Admin note. My wife is having surgery (ankle, nothing too serious) on Monday morning so I may not be fully available. I'll have my laptop at the ready while I'm waiting to hopefully respond to any emails, or possibly send alerts if needed. Although I cam never make any guarantees because I won't know the wifi situation until I get there.




The S&P 500 (C-fund) is sure showing us a lot of interesting information. The rally off the late September low has been explosive, but we certainly don't want to see it stall here and create a lower high. After the 3-day pullback, the bulls showed back up on Thursday, and on Friday it looked like they were ready to take control again - that is until that last hour of trading. I do see a possible bull flag (orange) that could propel it to the September highs, but there are 2 - 3 of support lines (red) that need to hold or that lower high may turn into a reality.




The weekly chart of the S&P 500 shows a higher high and a higher low over the prior week, but that's one of those spinning top candlesticks that can be a sign of an impending reversal, so we do need to be careful.




The DWCPF (S-fund) was down 0.37% as that 1680 has been a stubborn area to get past. Two open gaps were filled (blue) with last Thursday's pullback, but there are two more below (red) that are always possible targets. The steep rising trading channel has been broken, but that angle of incline wasn't very sustainable.




The EFA (I-fund) rallied back on Friday to almost fill Thursday's open gap, but you can see that the rising trading channel broke down, and that's not a great sign. The 50-day EMA has held so far.




The High Yield Corporate Bond Fund seemed to make a low on Thursday, and the early rally on Friday helped cement that, but of course the late selling on Friday didn't help the situation and it needs to bounce back quickly to remain above those key support levels.




BND was down modestly on the day although the F-fund was down just slightly. It closed back below the 50-day EMA and is in the middle of its recent range.




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

Tom Crowley


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S&P500 (C Fund) (delayed)

(Stockcharts.com Real-time)
DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

(Stockcharts.com Real-time)
BND (F Fund) (delayed)

(Stockcharts.com Real-time)

Yahoo Finance Realtime TSP Fund Tracking Index Quotes