Stocks opened lower yesterday but most indices jumped into positive territory fairly quickly, although it took the Dow most of the day to move into the green. IBM's earnings was a big drag on the Dow, accounting for about 80-Dow points to the downside. In other words, the Dow would have probably been up about 100-points if not for IBM's loss.
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The small caps did well and outperformed the S&P yesterday, but the Russell 2000 chart is in a position that may need some help to keep the rally going. The Wilshire 4500, which is what our S-fund tracks, will be very interested in which way the Russell breaks. You will see in the charts below.
The I-fund gained 0.59% and may get some payback today with the late buying in U.S. stocks yesterday. Bonds were up.
The SPY (S&P 500 / C-fund) rallied nearly 1% and it's back above the 200-day EMA but trading volume was very light yesterday so can we trust it? I look at it two ways. We'd like to see volume higher on positive days to confirm that the big money is also buying. But it may also be a case of the average investor not trusting the market yet and them missing out.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The long-term monthly chart shows a possible excuse why the market stopped going down where it did last week. The rising parallel trading channel, which broke to the upside in 2013, has acted as support twice now. Resistance, once broken, can be solid support.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) had a nice day and will now test the falling 20-day EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Russell 2000 (small caps) is the one that concerns me. It had a very nice day yesterday, but it failed to make a higher high over Friday's negative reversal day kangaroo tail high, and that 20-day EMA could pose some problems - at least temporarily - if it stalls here. Another solid up day would be comforting.
Chart provided courtesy of www.stockcharts.comm, analysis by TSP Talk
The EFA (EAFE Index / I-fund) had a nice day but lagged the U.S. market returns. It is at a short-term resistance line now, but even if this is in a bear market, a rally up to the 50-day EMA is not out of the question unless the European economies are in really bad shape... and that's the talk.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) was up slightly but the bigger picture still shows what could be a long-term top for bonds - unless the stock market collapses on us.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, 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 A web page that points a browser to a different page after a few seconds
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