Despite the escalating violence in Iraq, stocks were able to close higher on Friday, going into a weekend of uncertainty. The Dow gained 42-points on Friday while bonds were down slightly.
We are seeing the overnight futures down as I write this Sunday evening, which isn't a surprise, but Monday morning gaps are more emotional than telling, and we'll have to see if a weak open is going to be bought.
[TABLE="align: center"]
[TR]
[TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"]
[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The SPY (S&P 500 / C-fund) has found some support at a couple of old resistance lines, and that's a positive, but there is an open gap and stronger support further down and they could be pullback targets if the current levels can't hold.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The QQQ (Nasdaq 100) is just two days off of new highs and haven't experience much of a pullback. That could mean there are gains to be digested and we could see a move down to the old resistance lines, or we could see another push to new highs which may surprise everyone. The market loves to throw us curves, and new highs at this point with what is happening in the Middle East, would probably be the least expected outcome early this week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The small caps are doing something similar to what they did in late May / early June. That is, they created what looked like a bull flag, but the flag part was getting a little steep and it became a question of whether it was a flag or a peak. The first one turned out to be a flag that broke to the upside. The current "flag" filled the open gap on Friday before reversing higher. This one looks like it has about a 1% wiggle room on the downside. If we see the 20 and 50-day EMA's break, and the rising support line near 1150, this will turn more bearish. Until then, we may see more dip buyers.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 is in a similar situation, but it is also dealing with a double top. This pullback is healthy so far and markets generally pull back from double tops, but we don't want to see too much damage done to the chart before the upside resumes.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Transportation Index may be pulling back on the recent move in oil prices. It was bullish to see the old resistance line act as support on Thursday and Friday, but if the violence in Iraq does not subside, and oil prices continue to move higher, the Transports may be the first to show the cracks.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Bonds were down on Friday but closed well of their lows. These two bond ETF's are trying to find support at the 50-day EMA after breaking below some key support levels this month.
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 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 www.tsptalk.com/comments.html
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.
