A poke above 2800, but a close below it.

Stocks opened sharply higher on Monday, peaked in late morning trading, faded as the day went on, but managed to hold onto slight to modest gains into the close. The Dow ended the day up 60-points, off the +200 points it had accumulated late Monday morning. The Chinese stock market soared on the potential trade deal that seems to be getting closer, but now U.S. investors may be concerned that a deal may already be priced in.

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The S&P 500 gained 0.12% on Monday, a day where the Chinese market gained a whopping 5.60%, after President Trump said the negotiations are in the advanced stages. The different reactions between the U.S. market and the Chinese Shanghai Index might suggest the deal may favor the Chinese. We don't know yet, but good or bad deal, there is a chance of a sell-the-news reaction.

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Betting against this market since Christmas has been a disaster for the bears. The questing is whether they will eventually be right, or if this pain trade, which is on the upside for the bears, is going to continue. The VIX (Volatility Index) was up 10% Monday, a day that stocks were also up. Is that the bears finally making a move?



The S&P 500 (C-fund) opened higher on Monday and jumped over that 2800 level that many are watching. It did close with gains but it settled back below 2800. That wouldn't be too concerning except that it happened when a trade deal with China was all but announced.

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The weekly chart shows why the 2800 area is a concern to many market technicians. Yes, we've seen a couple of moves above and below that range between 2600 and 2800, but because it keeps moving back into that area, it seems to be the comfortable range for the S&P 500 for now, and any moves above or below could be short-lived.

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The DWCP (S-fund) also reversed down after a strong early rally, but still managed a 0.06% gain.

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After rallying off the Christmas lows with stocks, the price of oil was down 3.3% yesterday. It's rising trend is still intact, but there is some overhead resistance in the form of its 200-day EMA so we'll have to keep an eye on that. Can stocks continue to rally if oil rolls over?

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The EFA (I-fund) rallied past the 200-day EMA last week, and yesterday it hit the 200-day Simple average before pulling back. It did close with nice gains but that may be because U.S. stocks pulled back after the overseas markets were already closed.

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The AGG (F-fund) was down slightly on the day but clinging near those recent highs. Again, I wonder why the safety plays of bonds and gold are doing so well while stocks are flourishing.

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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: www.tsptalk.com/plus.php

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

Tom Crowley


Posted daily at www.tsptalk.com/comments.php

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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