Stocks sold off on Thursday and for the first time in a while the selling was broad based. The Dow lost 196-points and that makes 8 straight down days, and that also makes it the longest streak in over a year. The small caps and the Nasdaq finally saw some profit taking, and the overseas markets are really starting to feel some pain.
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The damage wasn't bad. 196-points isn't even a 1% decline any more for the Dow, but coming off of seven prior down days may make this a little troubling, especially for those who have been doing well in some of the other indices like small caps, since it's a reminder that things can come down again. As we talked about in Thursday's commentary, don't get too complacent just because you made some good returns lately.
There was nothing specific triggering the sell off. We heard the Supreme Court weigh in on online state sales taxes, but the online stocks were down inline with the broad sell-off in other sectors, although investors did take advantage and buy some brick and mortar retail stocks who may benefit from that.
It feels like the trade situation, the Fed's hawkish outlook, and overseas economies is just continuing to weigh on the market, which initially were only impacting the large caps.
I'll talk more about the trouble overseas below, which may finally be hitting a crossroads as the slowing of the global economy (outside of the U.S.) is really starting to show up in the international market charts.
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[TD] Reminder: I apologize, but I'm going to be in and out of the office over the next couple of weeks [starting 6/7], doing some traveling. I will be checking emails and posting premium alerts as usual, and I will posting something here everyday, but it may be quick updates and my timeframes may be off a little. The AutoTracker may also be updated later than normal. I'll be back to my normal schedule on Monday.[/TD]
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The S&P 500 / C-fund was down after a 1-day attempt to rally from the recent dip. The 2800 area is the top of this post-correction trading range so it's not a surprise to find some resistance here. We saw it back off from there about two weeks ago but so far the bears have been unable to really capitalize on that resistance. Now the test is the support near 2745, which held earlier this week.
The small caps (S-fund) had its worst day in a while after hitting new highs the day before. The rising wedge is a bearish pattern but momentum and the rising support lines are still on the bulls' side until the bears can take them out. That 1440 area seems to be the line in the sand because there is not much support below there.
The Dow Jones Transportation fell below the F-flag formation again and looked to the 50-day EMA for support, which held at the lows on Thursday.
The EAFE Index (I-fund) closed at an almost 3-month low yesterday, and it's nearly at the 2018 closing low. It also closed below the 200-day EMA for a 3rd straight day. Perhaps the bottom of trading range will hold here, but the chart doesn't look too healthy.
Here are a few select overseas market charts and you can see why the I-fund has been struggling. We had some troubling charts and now all four of these are trading below their 200-day EMAs. In order clockwise we have the German DAX, the French CAC, the Chinese Shanghai, and the Hong Kong Hang Seng.
The AGG (Bonds /F-fund) was up slightly as investors opted for bonds over stocks yesterday. The 50-day EMA has been holding of late, but the 50-EMA hasn't been a major technical factor for this chart.
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, and thanks again for your patience over the last two weeks. Have a great weekend and I'll see you back here on Monday.
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.
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The damage wasn't bad. 196-points isn't even a 1% decline any more for the Dow, but coming off of seven prior down days may make this a little troubling, especially for those who have been doing well in some of the other indices like small caps, since it's a reminder that things can come down again. As we talked about in Thursday's commentary, don't get too complacent just because you made some good returns lately.
There was nothing specific triggering the sell off. We heard the Supreme Court weigh in on online state sales taxes, but the online stocks were down inline with the broad sell-off in other sectors, although investors did take advantage and buy some brick and mortar retail stocks who may benefit from that.
It feels like the trade situation, the Fed's hawkish outlook, and overseas economies is just continuing to weigh on the market, which initially were only impacting the large caps.
I'll talk more about the trouble overseas below, which may finally be hitting a crossroads as the slowing of the global economy (outside of the U.S.) is really starting to show up in the international market charts.
[TABLE="align: center"]
[TR]
[TD] Reminder: I apologize, but I'm going to be in and out of the office over the next couple of weeks [starting 6/7], doing some traveling. I will be checking emails and posting premium alerts as usual, and I will posting something here everyday, but it may be quick updates and my timeframes may be off a little. The AutoTracker may also be updated later than normal. I'll be back to my normal schedule on Monday.[/TD]
[/TR]
[/TABLE]
The S&P 500 / C-fund was down after a 1-day attempt to rally from the recent dip. The 2800 area is the top of this post-correction trading range so it's not a surprise to find some resistance here. We saw it back off from there about two weeks ago but so far the bears have been unable to really capitalize on that resistance. Now the test is the support near 2745, which held earlier this week.
The small caps (S-fund) had its worst day in a while after hitting new highs the day before. The rising wedge is a bearish pattern but momentum and the rising support lines are still on the bulls' side until the bears can take them out. That 1440 area seems to be the line in the sand because there is not much support below there.
The Dow Jones Transportation fell below the F-flag formation again and looked to the 50-day EMA for support, which held at the lows on Thursday.
The EAFE Index (I-fund) closed at an almost 3-month low yesterday, and it's nearly at the 2018 closing low. It also closed below the 200-day EMA for a 3rd straight day. Perhaps the bottom of trading range will hold here, but the chart doesn't look too healthy.
Here are a few select overseas market charts and you can see why the I-fund has been struggling. We had some troubling charts and now all four of these are trading below their 200-day EMAs. In order clockwise we have the German DAX, the French CAC, the Chinese Shanghai, and the Hong Kong Hang Seng.
The AGG (Bonds /F-fund) was up slightly as investors opted for bonds over stocks yesterday. The 50-day EMA has been holding of late, but the 50-EMA hasn't been a major technical factor for this chart.
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, and thanks again for your patience over the last two weeks. Have a great weekend and I'll see you back here on Monday.
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.
