Stocks opened higher on Wednesday but the market found itself fairly directionless for the rest of the day closing mixed with the Dow, S&P 500, and small caps being flat to slightly lower while the Nasdaq closed slightly higher.
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The I-fund fund had a nice day thanks to the dollar which fell about 0.9% yesterday. Bonds were down.
The futures got a small pop after hours on earnings report but the market has been floundering lately. It has had reason to rollover and die, but the bears have not been able to push it down. On the other hand the bulls have had their opportunity to break the S&P 500 out to new highs but the have not been able to. Who will blink first?
Despite the small 0.03% loss in the S&P 500 Index, the SPY (S&P 500 / C-fund) posted a tiny gain yesterday, but basically both were flat. You can see how this market has been churning in a fairly tight sideways range basically since the highs in late February. Whether this is a long drawn out topping formation, or a multi-month consolidation before a breakout to the upside, remains to be seen. The S&P 500 is above the 50-day EMA and that's always a good sign, but it has been flirting with breaking down below it several times.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) was down slightly and while it has been lagging lately, it is holding onto the bottom of the longer-term trading channel. As long as that holds it should be OK. The 50-day EMA hasn't been holding lately, but we saw a similar break in January before the bulls took charge again.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index is really testing its boundaries of that head and shoulders pattern. The tragic train wreck in Philadelphia may have put some additional pressure on the already weakened transportation stocks. The neckline is being testing again now and with the right shoulder basically completely formed now, we should know soon enough if this market leader is going to breakdown, or find support at the neckline and rebound.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) is back testing the top of the recent wedge formation. A breakout is needed or before you know it, it will be back at the bottom of the wedge.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar continues to slide helping our I-fund to outperform the U.S. indices (C and S funds) in 2015, and yesterday's generous gain of 0.86% in the I-fund had it passing the returns of those two funds in May.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) opened sharply higher on Wednesday but it could not hold onto those gains and closed for a third straight day below the longer-term support line. They are probably due for some relief but the chart is breaking down.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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