The new week started the same as last week ended. We saw modest losses in the Dow (-144-points) and S&P 500 (-0.58%), and the Nasdaq took another 1.4% hit. Small caps fell in between the two with a loss of about 0.85%. The I-fund held up with the help of a dip in the dollar.
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The action was poor with some technical breakdowns, but nothing too serious yet.
Some comments from J.P. Morgan Chase CEO Jamie Dimon gave the market some pause in afternoon trading as he commented on the prospects of a trade war with China, tax cuts, deregulation, and the reversing of quantitative easing (QE). He said there's is a lot of uncertainty, especially on the reversing of QE since, we've never been through that before.
Buying the dips usually works, until it doesn't. The odds likely favor this being an opportunity, but when investors like Dimon are concerned, perhaps it will be "different this time?"
Just as the Nasdaq did on Friday, the S&P 500 / C-fund followed in its shoes and broke down from the F-flag on Monday. It's not shown in this chart, but the low in the S&P was right on the 20-day EMA. It's possible that it will hold, and that would be the sign of a strong market, but if it does fail, we have the open gap near 2765, right where the 50-day EMA is, and that would be a stronger level of support. If we visit that area then we'll have to talk about the bottom of the rising trading channel, but let's not look too far ahead yet.
The small caps (S-fund) broke below its double layer of support on Monday after it fell through the rising support line and the 50-day EMA. Not the best sign, but we usually look for a 3-5 day confirmation below that support before declaring this an official breakdown..
The Dow Transportation Index tested its June high so it has been holding up rather well in comparison to the other indices that we watch. However, yesterday the chart produced a negative reversal day as it backed off from the double top.
The Financials (XLF) were testing the May highs on Monday morning, outperforming the other sectors, before it too lost steam - although it did close in positive territory. Unfortunately the negative reversal day probably means lower prices today.
The EAFE Index (I-fund) held up well as the dollar slipped about 0.35% on Monday. It's nearly filling the large gap from June with another fairly large gap still open just below 70. The question is whether this recently revitalized beaten down index can get back above the 200-day EMA. Normally, it's tough to do on the first attempt when it has been below it as long as it has.
The High Yield Corporate Bond Fund is a bright spike for the market as it sits near its highs. The problem is it is also at the top of that large rising trading channel, where it may find continued resistance.
The AGG (Bonds / F-fund) fell below that bearish flag-like formation but continues to cling above the 50-day EMA. It's not a pretty chart but I guess as long as it remains above the 50-day EMA it will be fine. But can it hold?
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. We'll see you back here tomorrow.
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.
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[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
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[TD]
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[TD="align: center"]
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The action was poor with some technical breakdowns, but nothing too serious yet.
Some comments from J.P. Morgan Chase CEO Jamie Dimon gave the market some pause in afternoon trading as he commented on the prospects of a trade war with China, tax cuts, deregulation, and the reversing of quantitative easing (QE). He said there's is a lot of uncertainty, especially on the reversing of QE since, we've never been through that before.
Buying the dips usually works, until it doesn't. The odds likely favor this being an opportunity, but when investors like Dimon are concerned, perhaps it will be "different this time?"
Just as the Nasdaq did on Friday, the S&P 500 / C-fund followed in its shoes and broke down from the F-flag on Monday. It's not shown in this chart, but the low in the S&P was right on the 20-day EMA. It's possible that it will hold, and that would be the sign of a strong market, but if it does fail, we have the open gap near 2765, right where the 50-day EMA is, and that would be a stronger level of support. If we visit that area then we'll have to talk about the bottom of the rising trading channel, but let's not look too far ahead yet.
The small caps (S-fund) broke below its double layer of support on Monday after it fell through the rising support line and the 50-day EMA. Not the best sign, but we usually look for a 3-5 day confirmation below that support before declaring this an official breakdown..
The Dow Transportation Index tested its June high so it has been holding up rather well in comparison to the other indices that we watch. However, yesterday the chart produced a negative reversal day as it backed off from the double top.
The Financials (XLF) were testing the May highs on Monday morning, outperforming the other sectors, before it too lost steam - although it did close in positive territory. Unfortunately the negative reversal day probably means lower prices today.
The EAFE Index (I-fund) held up well as the dollar slipped about 0.35% on Monday. It's nearly filling the large gap from June with another fairly large gap still open just below 70. The question is whether this recently revitalized beaten down index can get back above the 200-day EMA. Normally, it's tough to do on the first attempt when it has been below it as long as it has.
The High Yield Corporate Bond Fund is a bright spike for the market as it sits near its highs. The problem is it is also at the top of that large rising trading channel, where it may find continued resistance.
The AGG (Bonds / F-fund) fell below that bearish flag-like formation but continues to cling above the 50-day EMA. It's not a pretty chart but I guess as long as it remains above the 50-day EMA it will be fine. But can it hold?
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. We'll see you back here tomorrow.
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.
