Stocks opened lower but the downside accelerated after news of a downed jet over the Ukraine, plus the conflict on the Israel / Gaza bordered escalated. The result was a 161-point decline in the Dow, and the first 1% loss for the S&P 500 in over 50 days.
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Investors jumped to bonds for safety and the yield on the 10-year Treasury is back under 2.5%.
The SPY (S&P 500 / C-fund) was down over 1% for the first time in over 50 days and the chart is starting to show some cracks, but nothing serious yet. Some of the other index charts are showing some real problems so there is a concern that the S&P 500 will follow.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The small caps of the Russell 2000 continues its precipitous decline after making the double top on July 1. The 200-day EMA is suddenly in play and perhaps it will hold, or it may dance around it, similar to what it did in April and May. The drop has been steep so a slap-back rally is very possible, but the question will be if investors will sell the rallies - something this bull market hasn't seen too much of over the last couple of years.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) did not make the "U" bottom. Instead it looks like a bear flag breakdown, and if that is the case, the downside may not be over.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The bear flag on France's CAC 40 is still very obvious and this chart does not look very good.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (ETF of the EAFE Index, or our I-fund) is also showing signs of breaking down.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Bonds benefited from the sell-off in stocks but we'll have to see if the AGG can make a new multi-month high.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
I'll be doing some travelling over the next several days so let me apologize in advance if it takes me longer than usual to respond to emails.
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Thanks for reading! Have a great weekend.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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