The market's recently activity is almost without description. You really have to see it to understand what is happening. It's the worst start to a new year, ever. There was some relief yesterday, if you can call a 249-point decline in the Dow relief. But it was hitting losses of over 560-points before an intraday reversal took the indices well off their lows, and in the case of the small caps of the Russell 2000, closed with modest gains.
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The relief rally started after the S&P 500 fell through the October 2014 Ebola lows, and then hit the 200-week EMA. From the lows it rallied 47-points but still closed with a 21-point, or 1.12%, loss.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Hong Kong is now in the spotlight as they are having derivatives issues, reminiscent of our own problems in 2008. Unlike China's Shanghai Index, Hong Kong's market is part of our I-fund.
The S&P 500 Index (C-Fund) created a huge kangaroo tail reversal day on high volume, and that's a good sign. It's just too bad that the afternoon rally faded as we approached the close. It looked like it was going to be a classic capitulation-like reversal, but only the small caps pulled that off by closing in positive territory. A test of yesterday's low is very possible at some point in the near future, but this kind of reversal seems meaningful for at least a short term positive play. 
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) rallied strongly off the lows and if you look closely you will see why this index really needs move into positive territory today. The relief rally yesterday took it up to the old support line, and that could act as resistance, so more upside is needed to negate that. The S-fund / Completion Index did close with some losses while the Russell 2000 small caps Index actually rallied all the way back to close with a gain of 0.45%.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil was down sharply again. This daily chart isn't a great way to track oil since the futures trade nearly 24 hours a day and depending on which monthly contract you look at, the prices can be different. For instance, on the February futures contract the price fell all the way to 26.19 yesterday while the March contract only hit 27.56. The direction is the same but the question is, at what price is oil "low enough?"
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) gapped down yet again but also created a positive reversal day. The chart looks like Swiss cheese with those open gaps all over it. They will get filled but at this point it could be months for some of them.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Here is the EFA from back in late 2008, into 2009 where it also was littered with open gaps. By the fall of 2009 all of the gaps were filled. Some more quickly than others.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
As I mentioned above, Hong Kong is in some turmoil adding to the chaotic action in the Asian markets. Both the Hang Seng and Japan's Nikkei saw losses of nearly 4% on Wednesday and both are part of our I-fund.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) was up but reversed down when stocks recovered. It remains in a rising trading channel and is flirting with the October highs.
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 allocations of the 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.php
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