Stocks declined on Friday with the Dow losing 60-points but percentage-wise, the S&P and Russell (small caps) took larger hits. Bonds continue to tumble as yields spiked higher on Friday.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The I-fund saw the smallest decline, possibly because the losses in the U.S. market weren't as steep when the European markets closed on Friday morning. It may be paying the price today. There's a two day Fed meeting on Tuesday and Wednesday and that could be this week's catalyst.
The SPY (S&P 500 / C-fund) has been trying to hold above the July highs and for four straight days it fell to, or slightly below that level, but closed above it each time. The futures are down fairly sharply as I write this Sunday evening so if Monday's open is down as the futures currently indicate, we could see a breakdown below support. But if it plays out like it did earlier this year, it might not be too bad.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The consolidation after the breakout in early 2014 saw its share of false breakdowns and breakouts, but the trading range continued to suck the S&P back into it before a confirmed breakout and a new leg higher began in May. I market the PMO negative crossover back in March that actually triggered an oversold rally.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The market has been struggling since the double top in the Dow and the Dow has not yet been able to close above the July highs despite several attempts. The 50-day EMA may be the next test.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-Fund) lagged last week and it looks like it wants to test that 50-day EMA. A push to the 50-day EMA is fine, a breakdown below it may not be. Particularly if it happens with the lower high we are seeing.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Russell 2000 took a stiff 1% loss on Friday and it is testing the 50-day EMA also. The futures put that EMA in jeopardy, but I'm not always concerned about an emotional Monday morning gap open. They tend to get filled quickly if the smart money sees it as an opportunity.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA was down slightly on Friday as the European market were off a bit, but we did finally see the Japanese Nikkei breakout.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Nikkei had been testing the late July high for over a week before it broke out to the upside on Friday. The Japanese market makes up over 20% of our I-fund's value.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The IEF (Bonds / F-fund) has broken down and the only bullish thing to say about bonds right now is that they may be very oversold in the short-term and due for a relief rally. It seems the rising yields are concerning the stock market investors as well.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
There is an FOMC meeting starting on Tuesday and we should the the rate and monetary policy announcement on Wednesday afternoon.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and its 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 TSP Talk Market Commentary
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.
