Stocks opened higher but quickly went into hyper selling mode and we were looking at losses of 1% or more by noon ET. We saw some stabilization at that point and the buyers stepped up. By the close we had mixed results but the Dow was up 4-points, recovering from the early 165-point loss.
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The S-fund lagged and the I-fund led. Bonds were up.
Going over each of these charts, I am going to sound like a broken record because the situation is similar across the board. The SPY (S&P 500 / C-fund) rallied off of support, but found resistance at the 50-day EMA. Volume was rather light on a big reversal day, which is a little concerning. We usually like to see high volume on reversal days.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) closed just below its 50-day EMA as the right shoulder of its inverted head and shoulders pattern continues to form. The small caps lagged as the Russell 2000 lost 0.54% but it had a lot to make up after being down 1.3% at noon. We'll have to see if the buyers are still around to take the S-fund above that 50-day EMA resistance line.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index was up nicely but it ran into ... you guessed it... the 50-day EMA. It did break above its short-term descending resistance line, but it has a little more work to do to get the bulls coming back with any enthusiasm.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Nasdaq 100 (QQQ) had a good day gaining 0.8% and posted a very positive reversal day which tends to precede additional upside follow-through action, but it is now at its, say it with me... 50-day EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) has had a big run since the early January low, but look where it is now...
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) was up slightly and remains in the narrow rising trading channel. If stocks break above their 50-day EMA,s I would expect this rising trend to break down.
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.
