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TSP Talk: A quiet dip remains in progress

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Stocks were mixed again on Wednesday after a strong open but some selling as the day wore on. The Dow gained 97-points and the S&P 500 was up slightly, but once again the Nasdaq and the small caps struggled and closed the day on the downside. Bonds were up, the dollar was flat, and the I-fund led the TSP funds with a strong gain.

Daily TSP Funds Return


The internals confirm the gains in the Dow and S&P 500 while the Nasdaq Composite continues to lag and the breadth shows it.




The Nasdaq slipped below its 50-day EMA yesterday, after the Composite Index filled one of its open gaps on Tuesday. The NDX Nasdaq 100 Index is below the Compq chart and it has not filled its gap yet, but it closed above its 50-day EMA.




The reason this is meaningful is because most of the large tech companies, the ones that dominate the Nasdaq indices, have reported earnings already and they were strong, but we saw a sell the news reaction. So the question is, how well can the rest of the market perform if these market leading tech stocks don't bounce back right away?




The S&P 500 (C-fund) was up just slightly yesterday after giving up some solid morning gains. So far the recent pullback has tagged the 20-day EMA and bounced back and the positive reversal day on Tuesday did lead to upside follow-through into Wednesday, but it didn't last. We've seen three tests of the 50-day EMA during pullbacks this year so far, one in each month except for April. We have seen a lot of choppy action over the last three weeks and the S&P actually closed below the April 15th closing price yesterday.




The DWCPF (S-fund) has pulled back sharply since making a new high a week or so ago, and for the last two days it has been flirting with its 50-day EMA. It broke below one rising support line (blue dashed) and if the 50-day EMA gives out, the next support level would be down near 2100.




The EFA (I-fund) had a big day, and that was without much help from the dollar, which was fairly flat on the day. It remains in its red channel, which is rising. The 50-day EMA has been holding firmly on this chart for months.




The High Yield Corporate Bond Fund made a new high yesterday, and that's usually a very good sign for the stock market. However, there is some resistance just overhead coming off a couple of recent peaks.




The Volatility Index was down slightly but stayed relatively elevated and closed above 19 for a second straight day.




BND (F-fund) was up on the day as yield dipped slightly again. There is some resistance near 85.40 but it has now closed back above the 50-day EMA for two straight days. Why bonds are rallying under the current economic environment, I don't know, but they keep creeping higher since that mid-March low.




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

Tom Crowley




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

The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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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