TSP Talk Blog

Stocks were mixed on Monday but most indices did close well of their lows as the dip buyers stayed close at hand. The small caps and led with the implications of a minimum global corporate tax now a possibility for larger companies. The Dow lost 126-points, the S&P 500 was down slightly, while the S-fund and I funds picked up solid gains. Bonds and the dollar were down on the day.

Daily TSP Funds Return More returns

We came into the week talking about the G-7 and their 15% minimum global tax on corporations and the concerns that may have for investors regarding corporate profits. The initial react was negative as stocks opened lower, however the small caps rallied strongly as smaller U.S. companies won't be impacted the same way the multinational corporations, so the news wasn't completely ignored. Investors simply opted for the smaller companies.

Speaking of small caps, I have been very intrigued by this chart of the Russell 2000 ETF, IWM. Obviously, since I post almost every day. It continues to inch past another line in the sand, each time I draw one. The Ying and Yang pairings of each side of this pattern is very interesting, and now it has led us to the second point A, and so what potentially comes next?




Consolidation patterns like this do eventually come to an end and often to the upside so this may all be moot if it just breaks out to the upside.

Since we are often biased when viewing a chart that we are interested in, I decided to look at this to decide if I think it is a bullish or bearish chart. It looks like it is nearing a couple of the lower support lines while just breaking below the rising blue dashed support line. Is that a breakdown, or is it too early to say? Is it at the bottom of a range that will eventually rally back to test the top of the range? Can you tell what chart this is?




It's the same chart as the one above it. I just flipped it over. If this looks like something we want to be buying at support, does that mean the IWM chart (small caps) is something that needs to be sold? Or, is this about to break down, meaning we should be buying IWM?

The dollar fell for a second day since the weaker than expected jobs report. That helped the I-fund and to some degree, the small caps as well, and perhaps kept the large caps from an even bigger loss.

Admin note: The Last Look Report is on a free trial this week. If you had trouble adding your email address recently, it has been fixed. Sorry for the inconvenience. The info will come in a daily email from TommyIV about 30 minutes before the IFT deadline to help us make any last minute allocation decisions. It will also be posted in the premium area once the free trial is over. I'm sure it will evolve after we get started. Once the free trial is over, the cost will be $10 a month, or $5 for those already subscribed to another service. You can view a sample of what subscribers may get each morning, and there's a place to add you email to the list to receive the free report this week. The Last Look Report Info

---

The S&P 500 (C-fund) continues to flirt with the prior highs. The chart does not look bad but we don't know if we will get a breakout or a double top pullback first. It did not pull back sharply like it did after the April jobs report rally, but other than Friday's big rally on the weaker than expected jobs report, it has been moving basically sideways for about two weeks. The bears don't seem to have any interest in taking this down yet. At least not like they did after the April jobs report rally.




The DWCPF (S-fund) looks very similar to the IWM chart in the top section, which some differences. It's in a short-term rising trading channel (orange) with some overhead resistance not too far away. It looks like a big head and shoulders pattern but if it can reach that 2260 area, that formation would be gone, but at that point it would make a triple top area. Triple tops aren't as bearish as double tops, but that 2240 - 2260 area has been tough resistance all year.




The EFA / I-fund made another new high, again with the help of a decline in the dollar. It is up against resistance, but that resistance line is also rising.




The Dow Transportation Index was down yesterday as it drifts lower from its high made a month ago. The 15,200 area looks like it could be a decent support level.




BND (bonds / F-fund) pulled back after Friday's big rally. The 200-day EMA has been solid resistance for months, but that does look like a possible bullish inverted head and shoulders pattern. This chart is now going on 3-months since it made a low.




Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the TSP and ETF Systems. For more information on how to gain access and a list of the benefits of being a subscriber, please go to: www.tsptalk.com/plus.php

For more info our other premium services, please go here... www.tsptalk.com/premiums.html

To get weekly or daily notifications when we post new commentary, sign up HERE.

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.