Stocks opened lower on Thursday, tried to rally midday, but fizzled out toward the close and the indices ended flat but mixed. The Dow gained 6-points, one a few positive days it has had in the last couple of weeks, while the broader indices saw small to modest losses.
As we talked about on Thursday, positive reversal days are generally followed up with more upside momentum, but when the reversal is huge, and we saw a 277-point positive reversal in the Dow Wednesday, it's not always as easy as the bears were just beaten up and they tend to make another stand. But with that follow up day behind us, we could see the bulls try to make another move again today, although Fridays have been rather week this summer.
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The I-fund got some payback Thursday after Wednesday losses and bonds were down moderately.
The SPY (S&P 500 / C-fund) tried most of the afternoon on Friday, to overtake the 50-day EMA but in the end it failed. That puts a little continued pressure on the index despite the positive inverted head and shoulders pattern. I do like to see that Tuesday's low held. One day at a time.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (S-fund) had the big positive reversal day on Wednesday but couldn't follow-through on Thursday. It closed below the 200-day EMA and remains well below the descending resistance line.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) remained below the 200-day EMA and taking a broader look at this chart, I see an inverted head and shoulders pattern, although it's slanting downward quite a bit. That large open gap (blue) could be the H&S trying to test the middle of the head.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Japanese Nikkei Average has really held up well considered what has been happening to global markets, including the chaos with their neighbors in China. It bounced off of the 50-day EMA again and is not very far from new highs. Japan makes up nearly 10% of our I-fund.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Friday is trading day #10 in August. Finally, we're officially at the positive half of the month seasonally speaking. Volume should start to dry up and, like holiday trading, the bias tends to be positive.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The AGG (bonds / F-fund) was down and it filled the open gap created during Tuesday's rally. We could have a rising wedge pattern forming, but it's early.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at www.tsptalk.com/comments.ph
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