TSP Talk Blog

If you look at the big three indices it looked like a lousy day for stocks on Tuesday, but when we dig a little deeper it was the big tech stocks and semiconductors that put the pressure on, while the more broader indices like the equal weighted S&P 500 Index, the small caps, and the Transports held up well and / or rallied nicely. The Dow lost 118-points or 0.34%, while the Russell 2000 was up 0.61%. The charts are hanging in there but may need some help as resistance stiffens.

Daily TSP Funds Return More returns

Reminder that, because of the holiday, the share prices above represent the action of Monday and Tuesday combined.

Despite the red members above, the internals were quite positive. Even the Nasdaq Composite saw positive breadth.

The problem was the Nasdaq 100 - the largest 100 tech companies - which was down 0.35%, and the Semiconductor index, which impacts the Naz 100, was down 1.34% yesterday, and looks to be on the brink of a breakdown.




But the winners yesterday were the small caps indices like the Russell 2000, and especially the S-fund's tracking index, DWCPF which gained 0.84% yesterday.




The chart above is holding onto to some support near 2200, while those Nasdaq 100 and Semiconductor charts look to be in some possible trouble.

The banks start to report earnings today and that means an influx of earnings are just a couple of weeks away. FAANG stocks Apple, Amazon, Google (aka Alphabet), Microsoft, and Facebook all report in the final week of October, and that looks like an historically good time to be invested, but the week before (next week) has some seasonal issues.


Chart provided courtesy of www.sentimentrader.com


Today before the opening bell we'll get the CPI, Consumer Price Index, which has huge inflationary implications and can be a market mover. Estimates are for a gain of 0.3%.

At 2 PM ET the Fed will release the September FOMC Meeting Minutes.

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The S&P 500 (C-fund) was lower yesterday as the pullback from the failed test of the 50-day EMA continued. The orange moving average may be the downside target as a test of the recent lows. From there the question is whether the test holds or not. We can see the new downtrend in the red channel as the S&P experiences its most severe pullback of the year, but it really has not been that bad yet. A little cleansing before the typical holiday bullish run wouldn't be the worst thing that could happen, but we do have some warnings signs right in front of us that we can't totally ignore.




The DWCPF (S-fund) not only held up well, but rallied strongly and it was kind of under the radar as most indices were down on the day. The issue was that it failed at the 50-day EMA again.




The EFA (EAFE Index / I-fund) was flat and the rally in the dollar may have held it back a bit. I keep seeing those big open gaps, which could be upside rebound targets, but now we have what could be a bear flag forming. So far the test of the July low has held.




The BND (bonds / F-fund) rallied strongly, filling one of the overhead open gaps, with another one just overhead. This rebound was due and doesn't necessarily mean that the low is in, especially with the upcoming inflationary economic reports coming up this week. It's an ugly chart that was due for some relief. It could try to test the 200-day EMA with some positive inflationary news - positive meaning not inflationary.




The Dow Transportation Index had a big day gaining nearly 1%, and it took out some overhead resistance, but it remains in the larger descending channel with tougher resistance near 14,850.

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

Tom Crowley



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