Stocks were mixed on Wall Street yesterday with the Dow closing down 10-points, but we saw modest to moderate gains in many of the broader indices. Despite the gains, all of the indices closed well off their highs as big morning gains dwindled by the close, and that makes the day's action very questionable.
The loss in the Dow can be attributed to a 9% loss in Disney. Since there are only 30 stocks in the Dow, it can be impacted by just one if it moves enough. The July Jobs report will be released on Friday. Estimates are looking for a gain of 220,000 jobs, and an unemployment rate of 5.3%. The Jobs Report Contest is open in the forum. Click here for more information.
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We saw some solid gains in Europe and Asia before the U.S. markets started to slide, but still the I-fund's price seems to account for the weak close. Bonds were down for a second straight day.
The SPY (S&P 500 / C-fund) remains in the right shoulder of what appears to be an inverted head and shoulders pattern. Inverted H&S patterns tend to resolve to the bullish side, but it sure hasn't all that of late as every rally seems to be getting sold. On the other hand, the bears have not been able to push the indices to new lows since the early July lows. There seems to be quite a battle going on.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (S-fund) was having a big day on Wednesday but a nasty negative reversal sent it down to close near the lows. The good news is, anyone in the S-fund made some money on Wednesday. The bad news is, it was swatted back below the 50-day EMA and the descending resistance line after attempting to break above those levels.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index also had a nice morning - breaking above the tough to crack 200-day EMA. But by the close the Trannies were back below it and back in the "F" flag - as we called it yesterday (coined by Oscar Carboni). The last F-flag in July unfortunately did what an F flag tends to do. These are different from bull flags in that the flag is angling higher instead of lower.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) temporarily broke above the resistance of the apex, but close back on top of it. Like everything else, it looked good early, but couldn't hold.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar (UUP) was basically flat yesterday but if the cup and handle formation responds as a C&H normally does, we could see it break to the upside, and that may not be great news for the I-fund.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) was down again filling the open gap in the process. The short-term resistance line was broken and now the old descending resistance line is being called on to act as support. It is also holding above the 20 and 50-day EMA so that's actually a lot of support in the 108.75 area.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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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.
