Stocks opened higher but once again could not hold the early gains and we're hitting some very vital levels on the charts that could become do or die. The Dow lost 30-points but we saw more serious losses in the broader indices. We're not talking major losses but the indices continue to bleed. The S-fund, yes. It has been falling more rapidly, and the 200-day EMA may be the line in the sand for the bull market in small caps.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD]
[/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
On the bright side, the Transportation Index actually had a nice day and saw its second consecutive positive reversal day. It's not out of the woods yet, but perhaps this is a good sign for the rest of the market. I'll post the chart below.
After the close there was a mixed bag for earnings as Amazon disappointed while Alphabet (aka Google) was up after hours on their report.
Seasonality picks up in November as the stronger 6-month period of the year kicks in after the "sell in May and go away" six-month stretch. Stocks are actually up respectably since the start of May, but virtually flat over the last four months.
The SPY (S&P 500 / C-Fund) finds itself testing the 100-day EMA (green) yet again, which has held up pretty well since the January / February sell-off. A rising support line off the Brexit lows is being tested now as well. I marked the volume spikes on prior lows and the fact that volume has been quite light may be an issue - unless we see a big rally or reversal day today (Friday) where a spike in volume would be very welcomed.
The DWCPF (S-fund) looks bad after falling below some key levels like the 50-day EMA, the rising trend lines, and the September / August lows. But now it is facing the big bull market test in the 200-day EMA.
The Dow Transportation Index was a winner on Thursday and posted a second positive reversal day. It made its way back above the 50-day EMA and although it remains in a short-term downtrend since the high in early October, I like what I'm seeing here. On the other hand we saw previous positive reversals not produce too much so I won't be high-fiving anyone until we see a move above 8050.
The EFA (I-fund) was down slightly and has been closing in the tight area between the 50 and 200-day EMA's. The lower high doesn't look that good but as long as it can keep closing above the 200-day EMA I'll give the bulls the benefit of the doubt.
The price of oil rallied over 1% yesterday and it just keeps holding above that important $49 area. There's a double dose of support there but there's always the chance that the 50-day EMA needs to be tested before it gives another push higher.
The AGG (Bonds / F-fund) broke down, which is no surprise given the head and shoulder pattern that it has been forming. The 200-day EMA is about where the breakdown target would be from this H&S.
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. Have a great weekend!
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.
