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Flirting with new highs, and the I fund may be leading the charge

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The Dow and S&P 500 opened at their highs of the day on Thursday, chopped around for most of the day, then got a friendly bounce into the close. The Dow still closed down 28-points on the day, but the S&P 500 actually posted its highest closing price since July 30. The Nasdaq led the way with a 0.81% gain thanks to Microsoft's earnings the night before. Amazon reported disappointing earnings after the bell yesterday and that may shake things up some today.

Daily TSP Funds Return

After hours the the S&P 500 futures basically gave up Thursday's S&P 500 index's 6-point gain, which I suppose isn't too bad considering a major company like Amazon was falling over $110 a share (7%) after hours. There was a slight counter punch shortly afterward when Intel reported strong earnings. Intel used to be one of the most anticipated earnings reports on Wall Street, but that's not so much the case anymore and yesterday's after hours 7% gain likely will have trouble offsetting Amazon's 7% loss. This screen shot was taken about 30 minutes after the closing bell yesterday. It is a fluid market after hours so these numbers could be quite different by the time you read it.

We have a big week for the market next week with earnings continuing to come in, the FOMC rate decision on Thursday, plus a plethora of economic data highlighted by the October jobs report on Friday, so get some rest this weekend. It could be another wild one next week.

The S&P 500 (C-fund) closed at its highest level since July 30 yesterday, and while it keeps inching closer, it still can't quite get to those old highs. It's not surprising to see some profit taking near those old highs. That's why double tops produce pullbacks, but as I have been saying, triple tops are not as threatening and while we haven't had a breakout yet, the bears have also not been able to drag this index away from the recent highs yet.

The S-fund had another one of those days where the S&P 500 (+0.19%) and the Russell 2000 small caps (-0.17%) didn't really give us a good indication of what happened because it was the midcap stocks that did the moving, and it was a positive move this time.

The Transportation Index took a day off yesterday after an enormous run up this month. It's another triple top situation where we'd expect some stalling, but will the bears put enough pressure on to avoid a breakout?

The EFA (I-fund) was up modestly, although it closed off the highs, but this was day #2 above the prior highs so it held. That's a good sign so far...

Taking a longer-term view of the I-fund chart we can see that the all-time highs were made way back in early 2018. There's also a large gap that was left open during that sell-off, so filling that could be the first upside target - assuming this breakout is going to hold, which it may not. I like that 3 to 5 day close rule to confirm it.

The dollar's recent decline has helped the I-fund make that new high, but it had been trending higher all year so the fact the the I-fund was the first to make a new high is actually impressive, and potentially a turning point for this fund which has been lagging the C and S funds for the last couple of years. The dollar did break below support again like it did in June, but like June, it has bounced back in the rising channel.

The AGG (bonds / F-fund) was up slightly on the day but closed off its highs after failing at the 20-day EMA again. There's more support below than resistance above, so if this does breakdown, be careful in the F-fund. It could fall quickly. But if that support holds, it's a different story.

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Thanks for reading. Have a great weekend!

Tom Crowley

Posted daily at TSP Talk - Market Commentary

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.

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SPY (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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AGG (F Fund) (delayed)

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