It was another rough week for the stock market and the TSP stock funds. Bonds also continued their struggle leaving only the G-fund with a gain for the week. The indices have been in a range between two key moving averages for a few days, one acting as support and the other resistance. The Dow managed a decent gain on Friday but the afternoon selling took away the early gains of the other major indices, and the I-fund may have held onto its gain only because the selling in the U.S. market came late.
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Despite many concerns for the market, we are seeing some possible improvement in the charts, and it's not only the largest stocks of the S&P 500 that are holding up well, as has been the case with large tech stocks so heavily weighted in the S&P 500. But the chart below of the RSP shows that the equal weighted S&P 500, which weighs all 500 stocks in the S&P equally, is also holding above the 50-day EMA, which is what you want to see if the recent lows are in fact a bottom for the market. If there is a negative here it is that we may be seeing a small bear flag on the SPY.
The broader NYSE Index also has a lot of positive signs on it as it tested and held at the 200-day EMA and closed the week above it and the 50 EMAs. The 200-day simple average also held on a closing basis and many investors, money managers, and algorithm traders look at this as a green light to start buying. That also looks like a nice bull flag so if it can get above 16,800, there could be some room to run.
We get the CPI (consumer price index) on Tuesday, and the PPI (producer price index) on Wednesday and these will be the last of these reports before the next FOMC meeting so they will be crucial and potential market movers. The Fed is already bracing for the worst as they realize that they have been behind the curve with interest rates, but perhaps some relief from those inflationary reports could back them off a little. Probably not likely, but if there are any surprises they would likely be on the less inflationary side since everyone is expecting the worst.
The S&P 500 (C-fund) has been chopping back and forth between those two moving averages and the bulls need a little more enthusiasm to get back above that orange resistance area. Those boxes represent what looks like a possible inverted and and shoulders pattern which is generally considered bullish, but anymore downside below that purple moving average could negate that. There are certainly many possibilities but this is my immediate concern.
DWCPF (S-fund / small caps) has been beaten up lately but it too may be forming the right shoulder of a bullish inverted head and shoulders pattern. There is some tough resistance at the top of that red channel but that's more than 100 points away. It is below its 50-day EMA and that was a disappointment after the break above it in March. There are open gaps above and below the current price and if the one below gets filled first it would do some damage to the technical picture.
The EFA (I-fund) has been facing a strong dollar and that is usually bad news for the I-fund compared to the U.S. stock funds, and rather than a bullish inverted head and shoulders pattern, it looks more like a bearish upright head and shoulders pattern, which tend to break down. Of course it would be tough to believe that the I-fund would break down if the U.S. stocks break to the upside, but that dollar is a force to be reckoned for the I-fund.
BND (Bonds / F-fund) made more new lows and this is just one challenging trend for bonds. It's at the bottom of that channel so perhaps there's room for a small rally back to the top of it.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
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The price of oil was up on Friday but it is facing some resistance from the old support that it fell through earlier in the week. The good news is, the price of oil is back below $100 a barrel. The bad news is, I'm still paying $5 a gallon for gas in my town and these prices have to be weighing on consumer spending.
The dollar broke out of its bull flag last week helping put the pressure on the price of oil.
The yield on the 10-year Treasury was up again on Friday and rising interest rates will be another obstacle for consumers as mortgage rates and credit card interest also rise.
The dollar broke out of its bull flag last week helping put the pressure on the price of oil.
The yield on the 10-year Treasury was up again on Friday and rising interest rates will be another obstacle for consumers as mortgage rates and credit card interest also rise.
Despite many concerns for the market, we are seeing some possible improvement in the charts, and it's not only the largest stocks of the S&P 500 that are holding up well, as has been the case with large tech stocks so heavily weighted in the S&P 500. But the chart below of the RSP shows that the equal weighted S&P 500, which weighs all 500 stocks in the S&P equally, is also holding above the 50-day EMA, which is what you want to see if the recent lows are in fact a bottom for the market. If there is a negative here it is that we may be seeing a small bear flag on the SPY.
The broader NYSE Index also has a lot of positive signs on it as it tested and held at the 200-day EMA and closed the week above it and the 50 EMAs. The 200-day simple average also held on a closing basis and many investors, money managers, and algorithm traders look at this as a green light to start buying. That also looks like a nice bull flag so if it can get above 16,800, there could be some room to run.
We get the CPI (consumer price index) on Tuesday, and the PPI (producer price index) on Wednesday and these will be the last of these reports before the next FOMC meeting so they will be crucial and potential market movers. The Fed is already bracing for the worst as they realize that they have been behind the curve with interest rates, but perhaps some relief from those inflationary reports could back them off a little. Probably not likely, but if there are any surprises they would likely be on the less inflationary side since everyone is expecting the worst.
The S&P 500 (C-fund) has been chopping back and forth between those two moving averages and the bulls need a little more enthusiasm to get back above that orange resistance area. Those boxes represent what looks like a possible inverted and and shoulders pattern which is generally considered bullish, but anymore downside below that purple moving average could negate that. There are certainly many possibilities but this is my immediate concern.
DWCPF (S-fund / small caps) has been beaten up lately but it too may be forming the right shoulder of a bullish inverted head and shoulders pattern. There is some tough resistance at the top of that red channel but that's more than 100 points away. It is below its 50-day EMA and that was a disappointment after the break above it in March. There are open gaps above and below the current price and if the one below gets filled first it would do some damage to the technical picture.
The EFA (I-fund) has been facing a strong dollar and that is usually bad news for the I-fund compared to the U.S. stock funds, and rather than a bullish inverted head and shoulders pattern, it looks more like a bearish upright head and shoulders pattern, which tend to break down. Of course it would be tough to believe that the I-fund would break down if the U.S. stocks break to the upside, but that dollar is a force to be reckoned for the I-fund.
BND (Bonds / F-fund) made more new lows and this is just one challenging trend for bonds. It's at the bottom of that channel so perhaps there's room for a small rally back to the top of it.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
