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A lot of green markets yesterday - even the safety trades

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Stocks traded in a tight range on Wednesday and counter to Tuesday's action, we saw a strong close after some earlier weakness. The Dow gained 46-points, off an early triple digit gain, but the Nasdaq and S&P 500 closed near their highs of the day creating some positive reversals on the charts, so the back and forth continues. That's 9 consecutive days of alternating up / down closes for the S&P 500. How's that for choppy?

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It was an interesting day. The dollar was basically flat but for some reason stocks were up, bonds were up, gold - up, oil -up, copper - up.

Oil and copper being up isn't a surprise on a positive day for stocks, but bonds and gold, the safety trades, also did well. So, while the stock indices are at key resistance levels, bonds and gold are holding at key support levels, and something is likely going to have to give.

Despite the gains yesterday, both the AGG and GLD tested their 20-day averages and failed to close above them. That's the bullish case for stocks, that these two could rollover, but those rising support lines are still supporting them.

At the same time the S&P 500 is fighting to break above its overhead resistance.

As I said, something is going to have to give. The "easier" move would be a bounce off support for bonds and gold and a pullback in the S&P 500, but as I've said before triple tops are not as common as double tops, and the resistance may not be as formidable for the S&P 500 this time.

Some bellwether companies have posted disappointing earnings lately, but the Street has been anticipating a weak quarter so they may be getting a pass because we haven't really seen much selling in the broader market on the news. On the contrary, the S&P 500 is within 1% of its all-time highs.

Yesterday Microsoft posted earnings, and while they didn't knock the cover off the ball either, they were slightly better than expected, and the index futures rallied after hours. Tesla was also up big on earnings, but I don't think the market is too focused on that one anymore - maybe the Nasdaq.

The S&P 500 (C-fund) continues to chop around near the recent highs. It would seem like the market is a little fatigued here, but that's because it has come a long way since the early October lows, and while the bears have been able to keep the bulls from making new highs, they have done little to pull the index back. I drew in an inverted head and shoulders pattern, which is what this could be making if the right shoulder consolidation can keep from breaking down, despite that open gap that it really wants to fill.

The S-fund saw a small gain after Tuesday's dip, and the rising support line off the recent lows is still holding. You can see that there is also a bunch of resistance in the area around 1410. A 1420 tick would be huge for the bulls here.

What do we have here? A new 52-week high for the EFA (I-fund)?! With the dollar chart forming a bear flag, that makes this very interesting. We could have ourselves a serious breakout here any day if the dollar does break down.

I posted the AGG chart up top, but here's the yield of the 10-year Treasury Note, which moves counter to bond prices. It pulled back yesterday but seems to be trying to find support at the 50-day EMA, which it broke above a week or so ago. That could be a bull flag, meaning a move higher wouldn't be a surprise, but there is a small open gap near 1.675% that may try to draw it in.

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:

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

Tom Crowley

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