Stocks had their worst day in about a month as the Dow lost 91-points, which was the seventh consecutive day of losses for the Dow. Small caps lagged with a loss over 1%, while the S&P and I-fund lost about a half of a percent each. There was a late afternoon rally that took the indices off their lows so we'll see in the coming days if its those underinvested folks jumping on an opportunity.
Disappointing auto sales hurt the auto sector, and retail stocks, which have had a nice run, were hit with a dose of profit taking and together begs the question if the consumer is keeping a tighter grip on their spending money.
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The losses weren't all that bad, but we're comparing them to the last month which saw stocks trade in a very tight range so this was a jolt. The bull flag on the S&P broke intraday but actually closed back within it. The "F" flag on the small caps did what F flags eventually do. Broke down. You'll see in the charts that the technical picture is still OK but we're seeing some cracks. The July Jobs Report comes out on Friday morning and the consensus estimates are looking for a gain of 185,000 jobs and an unemployment rate of 4.8%. The Jobs Report Contest is now open in the forum. Click here for more info.
The SPY (S&P 500 / C-Fund) temporarily fell below the bull flag and the 20-day EMA before the afternoon reversal pushed it back into the flag and back above the EMA. That late buying created a possible reversal day, but the losses may negate that so I wouldn't count on it. I'm sure the nervous bulls were the ones selling but the underinvested were right there getting what they were waiting for. Will a pullback continue, or was that it? That of course, is what everybody wants to know.
The DWCPF (S-fund) got F'd as F-flags tend to do eventually. We wondered how long that flag would last and we got the answer. This chart didn't bounce back late yesterday as nicely as the S&P 500 but the 20-day EMA has held so. The 20-day EMA isn't normally a strong support area, but on the first test it tends to hold in a strong market. The small open gap just below 1060, which corresponds with the June high, is back in play and could be the downside target for this pullback and could provide support.
The Dow Transportation Index was the big disappointment yesterday Japan as it fell through that strong support area that I had been bragging about, and turned what looked like an encouragingly bullish development in this leading index, into a failed bull flag. Things could turnaround, but it better do it quickly because this chart could get ugly in a hurry if it doesn't.
The EFA (I-fund) was down 0.50% on the day, holding up pretty well because of more weakness in the dollar. That small gap opened on Friday is completely filled now and that's a little house cleaning that we don't have to worry about anymore.
The HYG High Yield Bond Fund was down slightly yesterday but this Fund had been trying to tell us that there could be some weakness in stocks coming. But technically this chart is still OK as long as the 50-day EMA and the bottom of the trading channel holds. It's weakness is only a temporary warning flag for now.
The AGG (Bonds / F-fund) uncharacteristically broke to the upside last week and here we are two days later and the flag is breaking down as you'd expect a bear flag to do. It's a little odd that bonds did not perform better on a moderate down day for stocks, but that divergence hasn't been as common lately.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the 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 www.tsptalk.com/comments.php
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.
Disappointing auto sales hurt the auto sector, and retail stocks, which have had a nice run, were hit with a dose of profit taking and together begs the question if the consumer is keeping a tighter grip on their spending money.
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One of the bigger concerns for me was the breakdown in the Transportation Index, which was trying very hard to improve its technical picture lately, but some strong support gave way yesterday. The losses weren't all that bad, but we're comparing them to the last month which saw stocks trade in a very tight range so this was a jolt. The bull flag on the S&P broke intraday but actually closed back within it. The "F" flag on the small caps did what F flags eventually do. Broke down. You'll see in the charts that the technical picture is still OK but we're seeing some cracks. The July Jobs Report comes out on Friday morning and the consensus estimates are looking for a gain of 185,000 jobs and an unemployment rate of 4.8%. The Jobs Report Contest is now open in the forum. Click here for more info.
The SPY (S&P 500 / C-Fund) temporarily fell below the bull flag and the 20-day EMA before the afternoon reversal pushed it back into the flag and back above the EMA. That late buying created a possible reversal day, but the losses may negate that so I wouldn't count on it. I'm sure the nervous bulls were the ones selling but the underinvested were right there getting what they were waiting for. Will a pullback continue, or was that it? That of course, is what everybody wants to know.
The DWCPF (S-fund) got F'd as F-flags tend to do eventually. We wondered how long that flag would last and we got the answer. This chart didn't bounce back late yesterday as nicely as the S&P 500 but the 20-day EMA has held so. The 20-day EMA isn't normally a strong support area, but on the first test it tends to hold in a strong market. The small open gap just below 1060, which corresponds with the June high, is back in play and could be the downside target for this pullback and could provide support.
The Dow Transportation Index was the big disappointment yesterday Japan as it fell through that strong support area that I had been bragging about, and turned what looked like an encouragingly bullish development in this leading index, into a failed bull flag. Things could turnaround, but it better do it quickly because this chart could get ugly in a hurry if it doesn't.
The EFA (I-fund) was down 0.50% on the day, holding up pretty well because of more weakness in the dollar. That small gap opened on Friday is completely filled now and that's a little house cleaning that we don't have to worry about anymore.
The HYG High Yield Bond Fund was down slightly yesterday but this Fund had been trying to tell us that there could be some weakness in stocks coming. But technically this chart is still OK as long as the 50-day EMA and the bottom of the trading channel holds. It's weakness is only a temporary warning flag for now.
The AGG (Bonds / F-fund) uncharacteristically broke to the upside last week and here we are two days later and the flag is breaking down as you'd expect a bear flag to do. It's a little odd that bonds did not perform better on a moderate down day for stocks, but that divergence hasn't been as common lately.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the 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 www.tsptalk.com/comments.php
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.
