Stocks opened lower on Tuesday and most of the major indices closed in negative territory, but buyers stepped up to buy the morning lows and the losses turned out to be minimal. The Dow lost 21-points, and while there has been no real damage done, there is some possible topping showing up in the charts.
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If there is a top forming, it could be just a short-term peak that produces a buyable pullback, or it may be something more serious. I will be showing the TSP Talk Plus subscribers a very interesting, potentially troubling, indicator below that has me wondering if perhaps this Friday's jobs report data has been leaked. This indicator is hitting a level not seen in decades so it makes me a little suspicious that something is up.
The SPY (S&P 500 / C-fund) backed off a little from the overhead rising resistance. This is not very strong resistance, but that doesn't mean it won't hold, and we know the S&P 500 has come a long way over the last several weeks, and getting that gap filled seems like a reasonable expectation in the short-term. If anything more sinister is developing, hopefully the charts will tell us first.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq 100 (QQQ) fell below the recent breakout level in early trading on Tuesday, but the late push higher had it closing just barely back above it. So far so good, but you know that big open gap is going to want to get filled.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Russell 2000 was down sharply early on Tuesday - nearly 1%, but it closed down just 0.24%. That positive reversal is usually a good thing, but the index has now closed below the 50-day EMA for a second day, and bull flag I had pointed out earlier this week, looks to be failing.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) still has its bull flag intact, and this chart doesn't look bad, but there's little chance that this can breakout to the upside if the Russell 2000 breaks down.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds broke down a bit yesterday as the AGG rising support line failed. The 20-day EMA is trying to hold here but there are a couple of open gaps below that may draw some attention.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We get the May jobs report on Friday and estimates are looking for a gain of about 220,000 jobs, and an unemployment rate of 6.4%. As I mentioned above, I'm seeing something that has me suspicious that it could be a bad report, but I don't really know.
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 TSP Talk Market Commentary
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