Stocks were down sharply again on Friday, despite a valiant attempt to rally off of the morning lows. Apparently investors were concerned about holding into the weekend with all the issues going on with emerging markets and their currencies. The Dow lost 150-points but the broader indices actually held up a little better, while bonds closed higher.
[TABLE="width: 79%, align: center"]
[TR]
[TD="width: 300"]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The weekly action was extremely choppy, and of course that can trigger uncertainty and fear.
"The DJIA closed below its December low, after having closed at a 10-year high in December. Since 1900, this has happened 6 other times. The rest of the year was up 2 times, down 4 times with an average return of -2.7%. Its maximum loss at its worst point (between Feb-Dec) averaged -12.3% while its maximum gain averaged only +6.4%. This suggests a challenging year." (source: sentimentrader.com).
Here are the final numbers for January.
The S&P 500 (SPY) is in the process of creating a bearish flag that looks a little ominous. It is also trading below the important 50-day EMA with 6 consecutive closes below the EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Despite the bad news from the short-term technical picture, the good news is that a longer-term view shows that there may be some strong support just below coming from both the bottom of the long-term rising trading channel, and the old resistance line that was broken last October, which was successfully tested a couple of times since. A few closes below that support and I think we'll be in for some trouble.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The consequence of falling below that support brings us back to this 1929 chart comparison where the "3 peaks and a domed house" pattern continues to play out.
Chart provided courtesy of www.sentimentrader.com
The Nasdaq is still above its 50-day EMA, which is an advantage over the S&P 500, but it has a few strikes against it, too: The rising trading channel (blue) has clearly been violated, and the bear flag is about as obvious as they come.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
February is not one of the better months of the year, but I don't have the data on how February does after a down January.
Chart provided courtesy of www.sentimentrader.com
Bonds were up on Friday, keeping the rising trend intact, and both charts have been able to remain above their 200-day EMAs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bond yields remain in downtrends and the 30-year Bond yield is now below the 200-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Administrative Note: RevShark is offering a free trial to TSP Timing this week. No payment information is needed. You just need to create a login to the Premium Service area, if you don't already have one. Here's more information.
Read more in today's TSP Talk Plus Report. We post more charts and indicators, 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.
