Volatility continued on Wednesday as stocks opened lower, fell further, but despite187-point decline in the Dow, closed fairly well with buyers stepping up taking the indices well off their lows. A poor retail sales number was being blamed for the decline.
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The TSP stock funds dodged a bullet as they only lost about a half of a percent after having much larger losses earlier in the day. Bonds were up again.
The overnight futures went on a wild ride last night with huge swings in both directions after the Swiss National Bank (SNB) cut interest rates. It should make for an interesting day today.
The SPY (S&P 500 / C-fund) lost 0.60% yesterday but you can see it created a white candlestick because it closed higher than it opened. That makes a possible positive reversal day. It found support just above the parallel support line of the neckline of the head and shoulders pattern. It's possible that the inverted head and shoulders pattern is just completing its right shoulder. The left shoulder took a couple of months to get built and now the right shoulder may just be retesting the low. There's always the chance that we will see a test of the middle of the head, which could take it to the open gap near 190. That may be a long shot, but if the support does not hold, it becomes a bigger possibility.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) created another kangaroo reversal on Wednesday and managed yet again, to close above the 50-day EMA after plunging through it earlier in the day. This still looks bullish but it really needs to breakout to the upside to confirm that.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index found support at the December low and created a kangaroo tail which should help it move higher intraday today, but there is descending resistance line crossing near the 50-day EMA that could be tough to break.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) is in a bear market and now it is in a bear flag formation. That's not a good combination.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) continued its rally above the October highs, but it closed well off the intraday highs making a possible negative reversal day. It is now in a narrow rising trading channel and we'll look to see if the bottom of that range can hold on any pullback.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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