TSP Talk Blog

The market was greeted with a series of weaker than expected economic data on Thursday before the bell, so of course stocks... rallied. It's all about the Fed, I guess. Keeping them from raising interest rates and / more tapering their bond buying is what the market is feeding off, and weak data will do that. The Dow gained 154-points while small caps led as the love / hate relationship between investors and small caps continued. The dollar was down sending commodities higher, while yields were up but fairly flat. There was some trouble after the bell regarding earnings.

Daily TSP Funds Return More returns

Amazon reported earnings after the close yesterday, and was down over 6% after hours last I checked, and that sent the S&P 500 and Nasdaq futures sharply lower. The opening bell will have to deal with this development.




The dollar gapped lower - not holding up at the 200-day EMA as I suspected, so the weaker than expected economic data was too much for it. That decline helped the I-fund have a good day. It also helped commodities as oil, lumber, copper, and gold all rallied.




The price of gold had a breakout of sorts because of the weakness in the dollar but it could also mean a little trouble for the inflationary situation.




One thing the market does not want to see is weak economic data along with rising prices on top of it. That's a bad combination.

Here's the August seasonality chart, and this is one of the rare months that has had a poor record to start the month.


Chart provided courtesy of www.sentimentrader.com


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The S&P 500 (C-fund) made another new high before slipping in the final hours, closing just below the July 26 all-time closing high. After the bell on Thursday most of the day's gains were wiped out in the futures after Amazon's earnings so we'll see what that translates into at Friday's open.




The DWCPF (S-fund) had a solid day - not quite as good as the small caps of the Russell 2000 small caps index, so the mid-caps may not have performed as well, but still solid. The problem was that the breakout above that one resistance line that I continue to draw, did not hold into the close, creating a possible negative reversal day. One thing I did notice; despite the selling in the S&P 500 and Nasdaq futures after Amazon's earnings report, the Russell 2000 futures barely moved so they weren't impacted in that first hour of trading after the bell. We'll just have to see if that holds into today's open.




The EFA / I-fund led on the upside with that 0.36% loss in the dollar helping out. A large gap was opened in the process, and there may be some resistance at the 80 level.




The Dow Transportation Index was up nicely yesterday but the chart didn't really improve all that much.




The BND (bonds / F-fund) was down slightly with yields up slightly. The small bear flag remains intact while the top of the trading channel continues to hold as support.




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Thanks for reading. Have a great weekend!

Tom Crowley


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