Stocks opened higher on Thursday and from there the indices moved in different directions. The Dow continued higher and gained 300-points, so the headline looked good, but tech stocks rolled over and that sent the S&P 500 and Nasdaq lower. It wasn't a major loss but the charts now have some cracks after the negative reversal. To make things more complicated, the roughed up Transportation Index was up over 1% on the day. Yields were up sending bonds slightly lower.
[TABLE="align: center"]
[TR]
[TD="align: center"]
[/TD]
[TD]
[/TD]
[TD="width: 283, align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
After the holiday on Wednesday, yesterday felt like a Monday, and here we are on Friday already, so it's been an interesting week which includes the quadruple witching expiration (options and futures contracts are expiring at the close), and it's also post Summer Solstice, which historically has some impact on the direction of the indices - generally reversing the trends. By the way, there is also a tenancy for markets to reverse the week after an expiration Friday.
The trend in the 10-year Treasury Yield has been down, but yesterday it was up. However, it failed at the 200-day EMA for a second straight day, so this is clearly a downtrend for this yield and we'll see if anything changes today based on the summer solstice, but something tells me the quadruple witching expiration will have more say in what happens today.
Here's another trend that is being tested. The Dow Transportation Index has been badly under-performing the big three indices this year, and other than the move earlier this month on Fed FOMC / CPI day, yesterday was just the second close above that descending resistance line. The first breakout failed so let's see if this has any staying power for this market leading index.
On the other hand the Russell 2000, which isn't our S-fund but the two tend to move hand in hand, also had a couple of failed breakouts this month with each attempt convincingly getting swatted back down. It's starting to get a big long, but it's not a stretch to still call this a bull flag. There is a lot of resistance at 202 right now so it may be a tough feat, but a breakout and close above that level would certainly open the eyes of investors who have been avoiding this lagging index.
So we have our two most popular TSP stock funds, the C and S funds, moving in opposite directions, and we have a couple of historical tendencies, expiration Friday and the summer solstice, that can be market turning events. Will either or both of those funds change direction today or next week?
The S&P 500 (C-fund) made new intraday highs again yesterday, but with Nvidia reversing lower, the S&P 500 and the Nasdaq followed suit. The problem with that reversal was that it created another dreaded negative outside reversal day (NOR). You can see what happened after prior NOR days (red arrows.) There was one earlier this month (blue arrow) that did not cause any problems, but it may not have fit the definition of a NOR day since it didn't close below the prior day's low. The trend is still up so we'll have to see if any pullback will be bought at the bottom of the ascending blue trading channel.
DWCPF (S-fund) tried to rally earlier with the large caps, but it too got swatted back down and this was also a negative outside reversal day. The potential good news is that it is now above its descending channel which, as we talked about above, looks more like a bull flag on the Russell 2000 chart.
The EFA (I-fund) managed to hold onto a small gain despite a big rally in the dollar. Again, this was most likely due to the overseas markets closing yesterday while the US indices were still positive. The 0.42% rally in the dollar seems like it would have been too much to keep this ETF positive. It did fill a gap (blue) and stall but there's another open gap (red) up higher.
BND (bonds / F-fund) pulled back but closed well off its lows of the day. It's in an uptrend but near the top of the rising channel. There's also some support at yesterday's low, near the March top. However, a couple of large open gaps still loom below that support.
Thanks so much for reading! Have a great weekend!
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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"]

[TD]
[/TD]
[TD="width: 283, align: center"] Daily TSP Funds Return

[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
After the holiday on Wednesday, yesterday felt like a Monday, and here we are on Friday already, so it's been an interesting week which includes the quadruple witching expiration (options and futures contracts are expiring at the close), and it's also post Summer Solstice, which historically has some impact on the direction of the indices - generally reversing the trends. By the way, there is also a tenancy for markets to reverse the week after an expiration Friday.
The trend in the 10-year Treasury Yield has been down, but yesterday it was up. However, it failed at the 200-day EMA for a second straight day, so this is clearly a downtrend for this yield and we'll see if anything changes today based on the summer solstice, but something tells me the quadruple witching expiration will have more say in what happens today.

Here's another trend that is being tested. The Dow Transportation Index has been badly under-performing the big three indices this year, and other than the move earlier this month on Fed FOMC / CPI day, yesterday was just the second close above that descending resistance line. The first breakout failed so let's see if this has any staying power for this market leading index.

On the other hand the Russell 2000, which isn't our S-fund but the two tend to move hand in hand, also had a couple of failed breakouts this month with each attempt convincingly getting swatted back down. It's starting to get a big long, but it's not a stretch to still call this a bull flag. There is a lot of resistance at 202 right now so it may be a tough feat, but a breakout and close above that level would certainly open the eyes of investors who have been avoiding this lagging index.

So we have our two most popular TSP stock funds, the C and S funds, moving in opposite directions, and we have a couple of historical tendencies, expiration Friday and the summer solstice, that can be market turning events. Will either or both of those funds change direction today or next week?
The S&P 500 (C-fund) made new intraday highs again yesterday, but with Nvidia reversing lower, the S&P 500 and the Nasdaq followed suit. The problem with that reversal was that it created another dreaded negative outside reversal day (NOR). You can see what happened after prior NOR days (red arrows.) There was one earlier this month (blue arrow) that did not cause any problems, but it may not have fit the definition of a NOR day since it didn't close below the prior day's low. The trend is still up so we'll have to see if any pullback will be bought at the bottom of the ascending blue trading channel.

DWCPF (S-fund) tried to rally earlier with the large caps, but it too got swatted back down and this was also a negative outside reversal day. The potential good news is that it is now above its descending channel which, as we talked about above, looks more like a bull flag on the Russell 2000 chart.

The EFA (I-fund) managed to hold onto a small gain despite a big rally in the dollar. Again, this was most likely due to the overseas markets closing yesterday while the US indices were still positive. The 0.42% rally in the dollar seems like it would have been too much to keep this ETF positive. It did fill a gap (blue) and stall but there's another open gap (red) up higher.

BND (bonds / F-fund) pulled back but closed well off its lows of the day. It's in an uptrend but near the top of the rising channel. There's also some support at yesterday's low, near the March top. However, a couple of large open gaps still loom below that support.

Thanks so much for reading! Have a great weekend!
Tom Crowley
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
Daily Market Commentary Archives
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.