It was a nerve-wracking day for investors as the market lost its early gains, and by noon ET it looked like we could have a replay of Friday's sell-off. But stocks caught their balance, rallied into the late afternoon jumping back into positive territory, but could not hold onto those gains and sank into the close.
[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 small caps lagged losing over 1% on the day, while the I-fund may have gotten away with one and may pay a little back with today's price. Bonds also pulled back so only the G-fund came away unscathed.
Apple's earnings after the close may make things tough on tech stocks and the Nasdaq today - at least early on, but as I write this, the Dow futures are actually up (+43.00) about as much as they were down yesterday.
The S&P 500 (SPY) fell through short-term support and 20 and 50-day EMA's last week. Yesterday it dropped through another level of support area that should be getting the bulls' attention.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The longer-term annual chart shows a possible large head and shoulders pattern forming, and right now it may be testing the neckline. This is not a bullish formation as it could be a large top forming, but in the short-term, we could see a right shoulder attempt to form, and that could mean a move back up toward 1825.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq fell through its rising support line and the 50-day EMA, but managed to close right on them. The problem is, Apple reported earnings after the close yesterday, and it was a big disappointment sending the stock down nearly 10% in after hours trading. Apple's stock has a huge impact on the Nasdaq Composite and particularly the Nasdaq 100 and those two indices will really have their work cut out for them to remain above the 50-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Small caps were hit hard but the Russell 2000 managed to close within its rising trading channel. Again, Apple's weakness will likely have an impact on the small caps and put more pressure on the test of that support line.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds are starting to feel the resistance from the 200-day EMA. As we mentioned yesterday, bonds are in a bear market (because the 50-day EMA is below the 200-day EMA) and when in a bear market the 200-day EMA should act as resistance.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Tomorrow (Wednesday) we get the FOMC meeting, the final meeting for Ben Bernanke. Will they throw the markets a bone? Will the market rally in sympathy with his departing? Will it drop out of fear of the unknown? Will they announce another round of tapering? Any changes to interest rates? There is a lot at stake but over the last several months, even years, the market has applauded the FOMC meetings, so that's at least one positive going forward.
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.
