TSP Talk Blog

Stocks continued their roll that started last week after Thursday's positive reversal day. The Dow was up a modest 31-points although that was quite a bit off the early triple digit morning gain. The S&P 500 and Nasdaq closed at new highs so in each case it only took 2 - 3 days to go from the 50-day average back to new highs. The dollar and gold were basically flat, oil rallied sharply for a second straight day, and bonds were down as yields moved higher.

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Internally it was very strong again, and even the new lows backed off although 50 and 80 new lows are a bit elevated given the new highs in the S&P and Nasdaq. The overall trend of breadth has been a concern so the last few days are helping out those types of indicators, although they have not completely mended yet.





The Yield on the 10-year Treasury moved higher, and I noticed something interesting. Right up until July 19th the S&P 500 was moving in the opposite direction of the yield on the 10-year. After the 19th of July, they started moving in sync with each other. Earnings may have had something to do with it as investors choose between guaranteed yields of T-bills, or the yield of the S&P 500 dividends. The strong earnings may have pushed them back to the stock market dividend. I'm guessing, but the timing would suggest something to that effect.




The Jackson Hole Economic Symposium starts Thursday and of course it could be a market movers as investors hang on every word from the economic leaders. All they want to know is, how much help are you going to give the economy, and for how long?

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The S&P 500 (C-fund) moved up modestly gaining 0.15% yesterday, but that was enough to close at another new high. I believe I heard that it was the 50th new all time closing high in 2021. Pretty startling considering that we have a pandemic where employees are being forced to get vaccinated. Perhaps the talk of mandates is what is helping the market, I'm not sure, but something is pushing stocks up that wall of worry. The bulls will take it however they can get it. The chart is back to its upper resistance line and we know it can ride up that line for longer than we think, so I don't want to sound overly bearish, but we may also be due for some sideways consolidation for a few days like after the similar rally in July.




The DWCPF (S-fund) has rallied very sharply over the last three days after holding at that solid lower support line. There is equally solid resistance just overhead that has held over and over, but if you keep knocking, someone may eventually open the door. However there may be some tidying up to do with those two open gaps below (red boxes).




Here's a closer look at those gaps on the S-fund. The blue gaps are now filled, and the red are still open. Yesterday the rally filled another open gap on Monday of last week (top blue box). The question is, can this get through resistance before filling those gaps below?




The EFA (EAFE Index / I-fund) was up again, this time the dollar didn't help too much as it was flat. There are opened gaps above and below the current level. In general I'd say this chart looks pretty good but it may want to fill the open gap near 79.50 at some point before climbing too much higher.




The Dow Transportation Index was up modestly but closed well off the highs creating a negative reversal day. And, for a second day in a row, it traded above its 50-day EMA average, but failed to close above it. I'm still iffy on whether that is a bearish flag forming.




The BND (bonds / F-fund) was down as yields moved higher and this chart did pull back into that long term rising channel again, so now we have to watch to see if it become resistance.




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Tom Crowley




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