Tuesday was a bit of a snoozer but we finally saw a little life from the bulls as they bought the early dip. Unfortunately they couldn't hold the midday gains into the close, but it was a start and we saw a few positive reversals on the charts. The Dow ended the day with a small loss of 2.51.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD="align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The large caps led and bonds were down.
The indices started to peak in the latter half of May and since then it's been like the frog in a pot of boiling water analogy. The losses have hurt but it has been in small pieces and the S&P is down about 3% from the peak to yesterday's low. That really is just noise at this point, or is the water starting to boil and I'm the frog that is just getting used to the heat?
The SPY (S&P500 / C-fund) closed for a 4th day below the 50-day EMA and one more day would put it in a territory it hasn't been since January. The two dashed red lines are parallel lines so the index is now testing the lower end of an ascending parallel trading channel. The smaller blue dashed line is another shorter-term support line that was broken on Monday and it was interesting that Tuesday's high hit it and pulled back.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) briefly broke below its rising support line, but climbed back in at the close. There were dip buyer willing to buy and that's a good start, but the test will be when the bears try to push things down again. In weak markets selling rallies takes over from buying the dips, and that's what we're waiting to see on any relief rally.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Nasdaq created a very strong positive reversal day in a very key spot. The 50-day EMA was broken convincingly on Tuesday morning, but buyers stepped up and it closed back above it. That's the line in the sand right now.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) was down and is flirting with the important 200-day EMA. Those international stocks don't mess around and the EFA is down over 5% from the late May highs.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar continues to decline although yesterday's losses were minor. It seems to want to fill that large open gap below but it missed an opportunity so perhaps there is a some support here? But if that gap is filled the I-fund would likely outperform the U.S. stocks again - at least until that gap gets filled.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) were down. Again, this chart looks bearish but nothing goes straight down so we could see some relief rallies here and there.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and 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.
