Stocks had a bad week last week as the Dow was down all 5 trading days. That hasn't happened since May of 2012. The market seemed to be pricing in a bad outcome from the referendum to be held Sunday on the annexation by Russia of part of the Ukraine.
Here are the weekly, monthly, and annual TSP fund returns through Friday, March 14...
No one seemed to want to hold stocks going into the weekend and the referendum, but now that we have seen a "sell the rumor" reaction, the bulls are hoping for a "buy the news" reaction when stocks open on next week.
The S&P 500 (SPY / C-fund) has fallen sharply off the recent highs and what we may be looking at is an inverted head and shoulders breakout, pulling back to test the neckline.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This is a common outcome for an inverted head and shoulders, but that neckline cannot breakdown for more than a few days. That makes this coming week's early action particularly important.
The small caps (S-fund) have also pulled back sharply from the short and longer-term resistance. This is a weekly chart where each bar represents a week's worth of action. One of my favorite definitions of a bull market is a chart that starts in the bottom left hand corner, and ends in the top right hand corner. But markets don't go straight up, or straight down, and right now the small caps look to be digesting the recent run up to the long-term resistance line. There is still room on the downside in this rising trading channel so the pullback may not be over yet, but right now this looks like a "buy the dip" situation. If the support lines and the EMAs break, that may change the story.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds (F-fund) have been trading in a range since early February and this chart is actually quite bullish for bonds, but we need to see a breakout above the resistance line. This is what they call a cup and handle formation and they do tend to break to the upside.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
If we do see this breakout, that would not be a great sign for the stock market, so I will look to the bond market for clues if stocks are going to remain in their uptrend or not. If we see 3 to 5 closes above the 102.50 level on the above chart, I might consider getting more defensive on stocks.
Good luck,thanks for reading! We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at TSP Talk Market Commentary.If you need some help figuring out what to do, perhaps one of our premium services can help.
Tom Crowley
www.tsptalk.com
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