I'm having some computer issues at the moment and everything is running very slowly for me so I am going to try to make this quick and brief...
Stocks were up yesterday but once again the indices closed well off the highs. We did see some positive technical action in the charts, but we need to see a little more before we have a successful breakout in the S&P 500. The Dow ended the day up 64-points and I guess the bigger news is the breakdown in bonds.
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Small caps and the I-fund led the way as the dollar lost ground again.
The action in the SPY (S&P500 / C-fund) was positive but that weak close leaves the bulls a little empty. We'll have to see if that descending resistance line that it broke through yesterday, can now hold as support. And of course that 211 area is still key support being the rim / breakout point of the cup and handle formation.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) had a nice day and continues to outperform the large caps in the short-term. We may be seeing a breakout from an inverted head and shoulders pattern, but it's a little lopsided at the moment. A move above 1120 would be positive but of course we want to see new highs here or we will keep hearing calls for a top.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index has run back up to the neckline resistance of the broken head and shoulders pattern. This is where an H&S would normally fail so we'll see if this rebound in the Trannies is anything more than a dead-cat bounce.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) had a nice day, but it closed well off the highs and backed off from trying to fill the overhead open gap. That was negative technical action for the very short-term but the "V" bottom at the 50-day EMA may still be good.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar continued to fall and it filled a second open gap (blue) in the process. That leaves one large open gap below, and one open gap above (both red). This looks like we may be seeing a lower high and that means the a lower low is very possible, and that's actually good news for the I-fund.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) sank again and we may be seeing the formation of a long-term top for bonds. In the short-term they may be oversold, but this looks quite bearish for the F-fund for the intermediate to long term.
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
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