Another choppy day on Thursday but the big three indices survived an early sell off as those relentless dip buyers showed up on cue. The Dow did lose 67-points, but the S&P 500 and Nasdaq were able to close with small gains. Small caps, the I-fund, and the Transports weren't as fortunate as each of them saw losses of about 1% or more. Bonds were up / yields down, the dollar broke out causing some pricing pressure - including the price of oil which dropped another 2.6% yesterday.
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Once again we saw internal damage being done despite the S&P 500 and Nasdaq moving higher. If you didn't know, and I showed you just this data below and asked if you thought the stock indices were up or down on the day, it would be tough to guess that they were up. Yet they were.
The flip side to this coin is that we could be seeing a stealth market correction beneath the surface, which I suppose could be a good thing. It would be like seeing large losses in the Dow, S&P, and Nasdaq because Apple, Microsoft, and maybe Disney were down sharply, and most stocks were up on the day, but because the largest companies are weighted so heavily in the indices, they control the index. That would be considered a strong market yet the indices are falling - so it happens. The question is do you believe the action of the broader market or the minority of market movers within the index?
The yield on the 10-year Treasury recently filled gaps both above and below and now it seems like the downtrend is taking over again with it back below the 50 and 200 day averages, however that looks like a pretty solid double bottom below 1.15%.
The dollar rallied sharply and it had its impact on prices. The I-fund is the one we most worry about as the EAFE International index was down was down about 1% yesterday because of this.
The positive reversal in the S&P 500 yesterday pushed it back near the all time highs (1.7% below) so the buying opportunities there are fleeting, and with our TSP deadline four hours before the close, you have to do a lot of guessing if you're trying to buy a dip because the dip may not still be there at the close when you're buying is being done in your TSP account. Small caps are a different story as the S-fund is now about 6% off its highs, which isn't a 10% correction, but it's something to work with for a market timer. The question is will it become a 10% correction before it makes new highs?
The S&P 500 (C-fund) fell sharply but unlike on Wednesday, it caught a bid at the lows and closed much closer to the highs of the day than the lows. If you look, besides Wednesday it closed close to the high of the day, everyday since the prior Wednesday. That's not an impressive pullback from the bears who continue to be out maneuvered - at least in the S&P 500. Small caps are a little different story.
The DWCPF (S-fund) fell all the way down to the rising support line, so the bears have been at work here. The question is whether support will hold, and even if it eventually breaks down, can we see a relief rally to fill in that open gap above 2225? The gap above 2200 did get filled and it flipped right back over so the action is certainly questionable. Let's see if support will hold.
The EFA (EAFE Index / I-fund) lost 1% yesterday with the dollar rallying. This chart always has open gaps on it because of the overseas markets trading while the U.S. is closed, but for the most part they do try to get filled. There's an open gap above and below the current level and a case can probably be made for either to be first to get filled. The double top pullback has basically played out and that is a typical technical reaction, but at this point it becomes less technical and more about what's going on in the world, and there's a lot going on right now.
The Dow Transportation Index failed and succeeded yesterday. It fell back below that key 100-day average again, but it got a little bounce off the bottom of the small trading channel. Unfortunately that trading channel looks a lot like a bear flag.
Semiconductors have been fairly volatile but it has stayed above the 100-day average for most of the year, and here it is challenging that support again. Make or break time for this chart?
The energy and financial sectors are both in interesting positions. The XLE energy fund broke below a large head and shoulders pattern. It needs to fix that situation quickly, otherwise the chart may be targeting a pullback near 40 or 41.
The financials have some decent support in the 37 area, and it could easily hold and head back up, otherwise it would be in some trouble as well.
The BND (bonds / F-fund) rallied nicely as yields fell. Depending on the thickness of your crayon, that upper resistance line may have been taken out again. We should know soon enough as a close today above or below 86.50 would tell us more about that.
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. Have a great weekend!
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="width: 338, align: center"]
[/TR]
[/TABLE]
Once again we saw internal damage being done despite the S&P 500 and Nasdaq moving higher. If you didn't know, and I showed you just this data below and asked if you thought the stock indices were up or down on the day, it would be tough to guess that they were up. Yet they were.
The flip side to this coin is that we could be seeing a stealth market correction beneath the surface, which I suppose could be a good thing. It would be like seeing large losses in the Dow, S&P, and Nasdaq because Apple, Microsoft, and maybe Disney were down sharply, and most stocks were up on the day, but because the largest companies are weighted so heavily in the indices, they control the index. That would be considered a strong market yet the indices are falling - so it happens. The question is do you believe the action of the broader market or the minority of market movers within the index?
The yield on the 10-year Treasury recently filled gaps both above and below and now it seems like the downtrend is taking over again with it back below the 50 and 200 day averages, however that looks like a pretty solid double bottom below 1.15%.
The dollar rallied sharply and it had its impact on prices. The I-fund is the one we most worry about as the EAFE International index was down was down about 1% yesterday because of this.
The positive reversal in the S&P 500 yesterday pushed it back near the all time highs (1.7% below) so the buying opportunities there are fleeting, and with our TSP deadline four hours before the close, you have to do a lot of guessing if you're trying to buy a dip because the dip may not still be there at the close when you're buying is being done in your TSP account. Small caps are a different story as the S-fund is now about 6% off its highs, which isn't a 10% correction, but it's something to work with for a market timer. The question is will it become a 10% correction before it makes new highs?
The S&P 500 (C-fund) fell sharply but unlike on Wednesday, it caught a bid at the lows and closed much closer to the highs of the day than the lows. If you look, besides Wednesday it closed close to the high of the day, everyday since the prior Wednesday. That's not an impressive pullback from the bears who continue to be out maneuvered - at least in the S&P 500. Small caps are a little different story.
The DWCPF (S-fund) fell all the way down to the rising support line, so the bears have been at work here. The question is whether support will hold, and even if it eventually breaks down, can we see a relief rally to fill in that open gap above 2225? The gap above 2200 did get filled and it flipped right back over so the action is certainly questionable. Let's see if support will hold.
The EFA (EAFE Index / I-fund) lost 1% yesterday with the dollar rallying. This chart always has open gaps on it because of the overseas markets trading while the U.S. is closed, but for the most part they do try to get filled. There's an open gap above and below the current level and a case can probably be made for either to be first to get filled. The double top pullback has basically played out and that is a typical technical reaction, but at this point it becomes less technical and more about what's going on in the world, and there's a lot going on right now.
The Dow Transportation Index failed and succeeded yesterday. It fell back below that key 100-day average again, but it got a little bounce off the bottom of the small trading channel. Unfortunately that trading channel looks a lot like a bear flag.
Semiconductors have been fairly volatile but it has stayed above the 100-day average for most of the year, and here it is challenging that support again. Make or break time for this chart?
The energy and financial sectors are both in interesting positions. The XLE energy fund broke below a large head and shoulders pattern. It needs to fix that situation quickly, otherwise the chart may be targeting a pullback near 40 or 41.
The financials have some decent support in the 37 area, and it could easily hold and head back up, otherwise it would be in some trouble as well.
The BND (bonds / F-fund) rallied nicely as yields fell. Depending on the thickness of your crayon, that upper resistance line may have been taken out again. We should know soon enough as a close today above or below 86.50 would tell us more about that.
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. Have a great weekend!
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.
