It was a bit of a rollercoaster day for stocks yesterday as the indices went straight down at the open, then straight up from about 10:30 to 11:00 AM ET to get back into positive territory, and then it went for the final plunge into the close.
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[TD="align: center"] Daily TSP Funds Return[TABLE="width: 155"]
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[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0063%[/TD]
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[TD="align: right"] F-fund:[/TD]
[TD="align: right"] +0.29%[/TD]
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[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -0.25%[/TD]
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[TD="align: right"] S-fund:[/TD]
[TD="align: right"] +0.27%[/TD]
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[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.06%[/TD]
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Plunge may be too strong since the Dow lost just 67-points on the day, the S&P 500 fell 0.25%, while the Nasdaq and small caps actually closed in positive territory. But it was a sharp and quick decline into the close.
The S&P 500 (SPY) again found support at the top of the higher open gap. This market's strength has surprised me all year so I guess I shouldn't be surprised if these gaps don't get filled, but I am expecting them to be filled before any serious upside continues.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The overhead resistance on the longer-term chart has held so far and there is more room on the down side than the upside in the recent trading channel, which is narrowing and can be considered a rising wedge.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The positive leaders right now are the Nasdaq and the small caps where this recent pullback has done very little damage on these charts. The Nasdaq has remained above the August high and the recent dip hasn't quite given back all of the gains from the "no taper" rally last week, like it has on the S&P and Dow.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bond yields fell again yesterday as both the 10-year and the 30-year yields (10-year shown) fell below the 50-day EMA and the rising support lines, convincingly.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Since bond prices move in the opposite direction of bond yields, the longer-term bond fund TLT moved above the prior late August high and that creates a new upward trend on the chart. We now see a higher low and a higher high on this chart.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
How long this trend lasts, we don't know, but a trend is a trend and has to start somewhere. It could just be investors hiding out in bonds while the debt ceiling and continuing resolution negotiations are still pending. We'll see. The deadline is September 30 so if there's no deals after that, who knows what will happen, but it probably won't be all that good for stocks.
In today's TSP Talk Plus report we'll look at small caps, what the financials are up to, and the Rydex Fund ratios are making a statement. 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 tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.html
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