Stocks opened lower on Monday, hovered around the flat-line until about noon ET, then sold off in afternoon trading and the Dow ended the day down 106-points. The excuse was weak economic data out of China and Japan, but we know how quickly the market has been rebounding after dips due to weak economic data lately so its tough to take seriously.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[TD="align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S-fund lagged falling over 1%, while the I-fund may have temporarily been spared some bigger losses because of the late selling in the U.S. indices. Bonds had a nice day.
The SPY (S&P 500 / C-fund) fell back below the rising resistance line that I have been obsessing about for weeks. I have opined that it looks like a neckline of an inverted head and shoulders pattern and while it is below that neckline there is a chance of a right shoulder being formed, potentially similar in scope to the pullback in July / August.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The PMO indicator has officially moved below the its 10-day EMA, which tends to be bearish.
The weekly chart shows that the S&P 500 tested the top of the weekly trading channel again last week. That doesn't mean that the bottom of the range will be tested next. It can get pinned to the underside of the overhead resistance for some time as we saw in June and July, and at the end of 2013. But it is a warning sign since a pullback becomes more probable.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) fell back down to the potential support area (red dashed line.) That support easily failed in September but it has held up twice since it recaptured that support line in late October. Yesterday's action created a negative outside reversal day, which is short-term bearish for the Wilshire.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) broke below the 50-day EMA on Monday, which is what we were waiting for; either a break above the 200-day EMA or a breakdown below the 50-day EMA. Now the 3 to 5 day countdown begins for confirmation. Another short-term rising support line was also broken (brown.)
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Oil's weakness may be due to several factors, but a weak global economy may be the concern as demand falls. Yesterday we saw West Texas Crude hit $63. That's the lowest it has been since the summer of 2009. The strength in the dollar is also part of the equation.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) was up after finding support at the rising support line. The rising trend remains intact, although that lower high may be a sign of things to come.
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 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 TSP Talk Market Commentary
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.
