Stocks opened strongly on Tuesday, but a couple of geopolitical news events turned things around - One at about 11 AM ET and the other just after 2 PM ET. The Dow, which was up over 70 in early traded, ended the day down 70-points so we saw negative reversals on most of the charts.
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Today concludes a two-day FOMC meeting so there could be some fireworks after the policy statement announcement - usually some time after 2 PM ET.
The SPY (S&P 500 / C-fund) moved up in early trading on Tuesday and filled the small open gap it created on Monday. From there things went south and it closed down at the bottom of its rising trading channel. We'll have to see if that support line can hold once again. My general thinking is, if you keep knocking [on support], eventually someone is going to open the door.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) followed up Monday's strong positive reversal day with an equally nasty negative reversal day. The descending resistance line that I drew in, is not really official until we see a lower low on the chart, and that wouldn't happen until the $EWM falls to about 1010.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Russell 2000 has been lagging lately, and while it produced a negative reversal day yesterday like the other indices, it did actually close in positive territory so we'll have to see if that has any meaning, or if it was just a matter of the small caps being oversold and there being some bargains.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
For a second day in a row, the market leading Transportation Index posted a loss of over 1%. This index hasn't posted 5 consecutive losing days in a long time and this is only the 2nd 4 day losing steak this year (March). The action during the rest of the week in the Trannies could be telling for the market in general.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE International stocks / I-fund) still looks troublesome to me as this appears to be a big bear flag. If however, this chart can break above the resistance line near 68.50, it would change things. The I-fund was up yesterday and that was because most of the damage done to the U.S. indices came after the international markets had closed, so the I-fund may have some fair value debts to pay today.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Friday is August 1st and August is one of the few months that starts out with a 3 negative days (on average.) And really, it's not until you get to the 10th trading day that things pick up and go above average.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The AGG (Bonds / F-fund) moved above the May high again yesterday but may have found some resistance at the old rising support line. Since it is rising, the AGG does have room to continue higher if it wants, and we'll have to see if the old resistance line becomes support.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
We get the July jobs report on Friday and consensus estimates are looking for a gain of 220,000 jobs and an unemployment rate of 6.1%. We have our month jobs report contest going on in the Forum if you are interested.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and its 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 TSP Talk Market Commentary
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