Friday was one of the most mixed days that we have seen in a long time. Stocks all opened higher on Friday morning and the Dow was up a solid 264-points as late as 1:15 PM ET, but things started to fade as we headed into the late afternoon trading.
By the close the Dow was up "just" 113-points, but small caps were down sharply, and the Nasdaq was down over 1%. The Transportation Index held onto a 0.9% gain, and you can see below that the I-fund gained 1.3%.
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The gain in the I-fund is always a tricky one as it was due some positive adjustments from Thursday, not now Friday's late selling should impact it negatively today. Bonds were also down.
The futures opened moderately lower on Sunday evening.
The SPY (S&P 500 / C-fund) was up most of the day on Friday and nearly filled the open gap just above 195.0, but the weak close is what you might expect in a bear market. As we have been saying for weeks... while in a bear market we should anticipate bearish results. Thursday's low near 190.50 may be an important level of support to hold or we will see the test of the lows resume.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart of the S&P 500 shows a possible bear flag. Bear flags can go back and forth within the flag so there could be some wide swings going forward, but if that flag breaks down, the downside target would be gloomy - Probably somewhere in the 1835-1840 area.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) came with about a dozen points of retesting the August low on Friday. There is still an open gap above that will eventually get filled. The question is whether it fills it before a test of the lows, or on the way up afterward?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Nasdaq was down over 1% on Friday and was clearly lagging the Dow and S&P 500. This is one of the last charts where the 50-day EMA remains above the 200-day EMA, but that could change by the end of the week.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil was up on Friday but like stocks, it closed well off its highs while continuing to trade within that big pennant formation. It looks like a bull flag although it is getting a little long, and the 50-day EMA seems to be holding it back from breaking to the upside. Interestingly, it seems to be in a similar situation the Shanghai Index.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
China's Shanghai Index is also in a pennant-like pattern, although this one is a bearish flag that is also getting quite extended. The 20-day EMA has been holding this one back and major descending resistance is coming into play. The reason we are watching this closely is because the Fed also has their eye on China and it could impact the interest rate decision.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) is kind of a mess and the bullish arguments are that it has so far held at the August lows and there are two open gaps above. The bearish argument, is that it is in a bearish formation in a bear market.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) was down on Friday but it remains within its rising trend line.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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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.
