Stocks floundered yesterday as lackluster economic data continues to drip in. A weaker than expected PPI report and disappointing retail sales sent the indices lower. Wal-Mart led the charge on the downside as they lowered sales and profit guidance sending that stock down 10% on the day, which contributed a large part of the Dow's 157-point decline.
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The weakening economic numbers are concerning, but on the flip side we know that investors like low interest rates, and the recent data strengthens the notion that a Fed rate hike may be pushed out to 2016. The yield on the 10-year Treasury Note has fallen back below 2%. Not exactly a sign of economic strength.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The SPY (S&P 500 / C-fund) has pulled back from the 200-day EMA and and is now approaching the 50-day EMA, an area the bulls might expect to hold if the bear market is transitioning back to a bull market. I still think it's a little too early to make that call but if the 50-day EMA holds, the case would get stronger.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) failed at the 50-day EMA and yesterday dipped back below the 20-day EMA. The open gap is a potential initial target for this pullback if the overhead resistance continues to hold.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The German DAX and Japanese Nikkei are two of the major players in the TSP's I-fund and seeing them both rollover before making a higher high is a technical concern.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) had a nice day yesterday and as I mentioned above, the yield on the 10-year Treasury Note fell below 2% again. Bonds remain surprising bullish but the surprise is lessening as the evidence mounts that the economy is showing signs of weakness and rate hikes may be put on hold.
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
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