Stocks opened sharply lower again on Wednesday and while the dip buyers showed up early, they faded a bit in late afternoon trading and the indices closed with modest losses. The Dow gave up 138-points and most of the major indices lost in the neighborhood of 0.5%, which is of some significance since it has been more than 2-months since the S&P 500 lost 0.5% in one day.
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A good part of the early losses were recouped by the close so someone is still buying the dips and that may be because of the potential for that new tax plan passing, and there's a little fear in the air of missing out on another tax bill rally. Of course that attitude in of itself is a little concerning but still, a 0.5% loss is not normally anything of any significance, unless we compare to the recent market activity which has had little volatility.
The SPY (S&P 500 / C-fund) pushed below some key levels intraday yesterday, including the 20-day EMA, which it closed below for the first time since August. Despite the recent volatile, the S&P is still only about 1% off of all-time highs. The concern for this index however is that the small caps and the Transports, as well as the High Yield Corporate Bond funds - all considered market leaders - have experienced more significant pullbacks.
The DWCPF (small caps / S-fund) closed below the 50-day EMA for the first time since August so it is one step below the S&P, following the Transports on the downside, and possibly leading the way for the S&P.
The Dow Transportation Index resumed its downside slide and is close to filling that open gap from early September. That 9350 - 9400 area will be key support and needs to hold like it did in August. The crosser of the 20-day EMA below the 50-day EMA can be an indication of being short-term oversold, so if it does continue lower, watch out.
The EAFE (I-fund) also dipped below the key 50-day EMA after last week's channel breakdown.
The dollar was off a bit yesterday but more importantly, the rally off the lows stalled at the 200-day EMA and it has now broken the rebound's rising trading channel.
The High Yield Corporate Bond Fund ended the day flat but it reversed up from another weak opening after nearly touching the 200-day EMA. There are two open gaps above that could be targets for any relief rally.
The AGG (Bonds / F-fund) rallied on the sell-off in stocks which helped push bond yields lower and bond prices higher. It looks like it is trying to create a higher low, but that wouldn't be official until it makes a higher high - above the November high.
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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The SPY (S&P 500 / C-fund) pushed below some key levels intraday yesterday, including the 20-day EMA, which it closed below for the first time since August. Despite the recent volatile, the S&P is still only about 1% off of all-time highs. The concern for this index however is that the small caps and the Transports, as well as the High Yield Corporate Bond funds - all considered market leaders - have experienced more significant pullbacks.
The DWCPF (small caps / S-fund) closed below the 50-day EMA for the first time since August so it is one step below the S&P, following the Transports on the downside, and possibly leading the way for the S&P.
The Dow Transportation Index resumed its downside slide and is close to filling that open gap from early September. That 9350 - 9400 area will be key support and needs to hold like it did in August. The crosser of the 20-day EMA below the 50-day EMA can be an indication of being short-term oversold, so if it does continue lower, watch out.
The EAFE (I-fund) also dipped below the key 50-day EMA after last week's channel breakdown.
The dollar was off a bit yesterday but more importantly, the rally off the lows stalled at the 200-day EMA and it has now broken the rebound's rising trading channel.
The High Yield Corporate Bond Fund ended the day flat but it reversed up from another weak opening after nearly touching the 200-day EMA. There are two open gaps above that could be targets for any relief rally.
The AGG (Bonds / F-fund) rallied on the sell-off in stocks which helped push bond yields lower and bond prices higher. It looks like it is trying to create a higher low, but that wouldn't be official until it makes a higher high - above the November high.
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.
