Stocks were lower on Friday as the problems in Greece boiled to the surface again. I'm sure there will be an eventual resolution as there always is, but for now the global markets seem a little bugged by the situation. The Dow lost 141-points on Friday, and as write this on Sunday evening, the indices futures are down about 0.5%.
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The I-fund led as the dollar was down again, and this illustrates what I have talked about before; the I-fund can outperform the U.S. indices because of weakness in the dollar, but it doesn't necessarily mean it will be up. Bonds were off slightly on Friday, after some early gains.
The SPY (S&P500 / C-fund) backed off and as we've talked about over and over, those open gaps will draw attention and there is a small open one down near 209. The intermediate-term trend is still up so the short-term noise is just that until we see some kind of technical breakdown. It doesn't mean you can't play the swings. The market has been in a bull market since early 2009 but there are often buy and sell opportunities within the larger trend.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart shows the long term rising trend is still intact but it is flirting with the lower rising support again. You don't anticipate breakdowns, but if / when they come you need to adjust your thinking. Last October was one of those that broke down only briefly and it really messed up the trend traders.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) is still within a strong rising trading channel and above the key moving averages, but that 1120 area has been acting as resistance. It's starting to get squeezed.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index broke down from a head and shoulders pattern last month and since the technical action has been textbook, which is bad news for the Transports. There is a ton of overhead resistance on this chart. The question we have been asking is, how long can the other indices continue to rally if the Transports are not coming along for the ride and are now actually in a bear market? It's more likely that one will break its current trend. Either Transports will bottom and resume and uptrend like the S&P, or the S&P will breakdown like the Transports.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) found support at the 200-day EMA last week but that is likely to get tested again this week if that open gap is going to get filled, and by the look of the futures, that's a good probability.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
You can see the German DAX, who is one of the major drivers of the European economy, has been in a downtrend since it peaked in early April. It's below the 50-day EMA and if this is the leader, it's going the wrong way.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) rallied early on Friday and filled an overhead gap before reversing back day and ending the day slightly lower.
Chart provided courtesy of www.stockcharts.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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