Stocks tried to break out of their sideways consolidation yesterday and the Dow gained 40-points yesterday, but the late selling left it in an interesting position. We talked the other day about the Dow not closing with a gain or loss of more than +/-0.23% in the last week. The 40-point gain yesterday gave the Dow a... you guessed it... 0.23% gain. That's 8-days in a row of 0.23% or less.
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The S&P 500, on the other hand, gained 0.51% (10.48-points) yesterday, and that was the first gain / loss of 0.50% in 10-days after a very rare stretch of days with a gain / loss of +/-0.07%. Many say that is a sign of complacency, but that's not necessarily true.
The SPY (S&P 500 / C-fund) poked above the neckline resistance line we have been watching. Closing above it is a bullish sign, but closing above it for 3 to 5 days is the real test of whether it is a fake-out or breakout.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) showed signs of fighting what was looking like a peak, but it remains below last Thursday's high and the slightly descending resistance line. It's tough to call this bearish, particularly if the S&P 500 moves above its neckline, but technically when below resistance, the nod goes to the bears until it can break out.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) surprised me with a push above the 50-day EMA yesterday, which was helped by a sharp rebound in Japan's Nikkei Index, and the German DAX which reversed to the upside with a possible bull flag breakout.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
To follow-up on what we talked about yesterday, that is, whether the German DAX's created a bull flag or a lower high peak, has so far gone the bull flag breakout way. But the 200-day EMA is just overhead, and if it is going to have any impact, we should know rather quickly. A bull flag breakout is certainly bullish, and can lead to at least some temporary upside action, but as we saw in early September, it may only be a short-term positive.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) was up and continues to hover above the 50-day EMA. It's a stretch, but there's a possible bear flag here, but as long as it remains above the 50-day EMA, bonds are OK.
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
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