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TSP Talk: Stocks mixed as market news quiets down

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It was another choppy, low volume trading day that saw the indices close mixed on the day. The Dow battled back late from early losses to close with a gain of 16-points, and the S&P added a similar modest percentage gain. The Nasdaq was down but the FAANG stocks were up holding the losses to a minimum. Small caps, on the other hand, were the victim yesterday with the Russell 2000 falling 1.6% and the S-fund giving up about 1%.

Daily TSP Funds Return


There is not a whole lot going on out there right now during this week before the banks start reporting earnings. The financial sector had a good day gaining 0.5% yesterday but basically we're still seeing a lot of rotation, and yesterday it was out of the smalls and into the large cap tech stocks as the Nasdaq 100 which led with a 0.24% gain.

Internally it was mostly negative as declining issues and declining volume outpaced the advancing on both the NYSE and Nasdaq.




The things I'm watching are the price of oil, which still sits precariously above the 50-day EMA and in a bear flag. Supplies are up, but that's not the issue for the economy. It's the lower demand as we head into the heavier driving season that may have economists worried. Even the dollar dipping recently didn't help the price of oil rebound from its recent pullback.



And of course there is the yield on the 10-year Treasury which hasn't been in the spotlight quite as much recently, but it has been trading sideways for the last four week and the stock market is fine with that. It was that strong 7-week rally that had investors worried before the recent consolidation.

We're seeing some stalling in the indices, particularly the small caps, and if the bulls don't step up, we could see the bears show some teeth soon. Other than that, it was a quiet day, with not much to say.




The S&P 500 (C-fund) has been digesting its recent gains over the last couple of days, and there's nothing wrong with that except that those flat tops generally aren't very bullish, as we saw back in January by that red arrow. We still have that open gap near 4025 and I think getting that filled before we see more upside could bring back some buyers, but as we've been talking about, there has been a pattern of falling back below the breakout lines before the upside resumes, so it could get worse than that gap if it does rollover.




The DWCPF (small caps / S-fund) chart looks a little toppy here and potentially in some trouble, but actually yesterday was the first down day for the DWCPF since March 29. It was those negative reversal days on Monday and Tuesday that turned the chart more bearish and led to yesterday's sell off. The question is, how much does this want to pull back? The 20-day EMA may be a good test if it is down again today.




The Russell 2000 small cap index, which is not our S-fund but obviously has an impact, looks like it is forming an ugly head and shoulders pattern. The 50-day EMA will be a key test here as a breakdown would likely take it down to the prior lows.




The EFA (I-Fund) posted a modest gain yesterday after filling in that open gap from Monday. It popped back above that February high again (blue line), but it remains below the red rising resistance line. The chart looks fine, but it really needs to get back above 77.50 to clear that resistance.




BND (bonds / F-fund) was down on the day as it backed off the top of that bear flag we've been tracking.




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

Tom Crowley




Posted daily at www.tsptalk.com/comments.php

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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)

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