TSP Talk Blog

Stocks rallied back on Wednesday after another negative open, so we saw a bit of a wash out sell off, as modest as it was, and a reversal. The Dow gained 316-points on the day and the S&P 500 and Nasdaq got back Tuesday's losses, but they're still down for the week. Same for the small caps which found support at the 50-day average, but remains below resistance. Bonds rallied.

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Some disappointing earnings out of Netflix the night before triggered a weak start to to Wednesday's trading, and Netflix traded down sharply, but that was apparently a green light for the bulls to do more buying in other companies after the two day pullback. Earnings will continue to pour out over the coming weeks, and with expectations pretty high already, and the indices near their all time highs, there is a possible set up for a sell the news reaction. Strong internals yesterday confirmed the strength in the indices, although the Nasdaq's new highs, new lows ratio was just barely positive.

The dollar was down after rallying early and attempting to fill its overhead open gap yesterday, so the negative reversal added to the positive reversal in stocks. There's resistance just above 24.60, and support at 24.50.




Yields on the 10-year Treasury were up slightly but apparently not enough to push the BND / F-fund into negative territory. The short-term trend is down in yields but the larger trend is still up while it trades above the 50-day EMA.




It's getting a little choppy out there and I'm not so sure yesterday's rally meant the pullback is over. It may, but there are still some obstacles on some of the index charts have to get by, and it may be that we have to get into May before the bears and their "sell in May and go away" mantra actually puts pressure on stocks.

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The S&P 500 (C-fund) looks like it wants to make new highs again, but those resistance lines are still there. They are rising resistance lines but still an obstacle as it trades near the top of the short, intermediate, and longer term trading channels. I keep indicating the open gap down there near 4025, which has been ignored and left open for weeks, but it still remains a potential target on any pullback.




The DWCPF (S-fund) had a huge day and the swings in the small caps continue to be very wide. We saw a bounce off the 50-day EMA this week, but it is still below that descending resistance line, which it backed off from after the failed breakout earlier this week.




The EFA (I-fund) rallied big but didn't get back Tuesday's losses yet and found some resistance at the top of that blue rising wedge pattern line. There' an open gap near 79 if the upside momentum continues into today.




The Dow Transportation Index closed at a new high but remains near that 15,000 area that it has been pressing against for about three weeks now.




BND (F-fund) rallied despite a move higher in the 10 and 30 year bond yields. The trend has been up for about a month now but it still is at the top of what I have been calling a bear flag, although the longer it gets, the less likely it will do what a bear flag normally does, which is to break down.




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Tom Crowley


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