Stocks were slightly higher to mixed early on Wednesday, but the trading was slow with everyone waiting on the Fed announcement. As usually, after the policy statement was released things got a little wild, but by the time the day was over, the Dow was about where it was just before the policy statement, +25-points.
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The I-fund was down, partially because the U.S. stocks' volatility was coming after the European markets closed, but more so because the dollar ramped up yesterday after the Fed announcement and the TSP probably took that into consideration when determining the price yesterday. Bonds fell sharply after the Fed announcement yesterday, erasing earlier gains.
Tomorrow (Friday) Alibaba goes public and it is supposed to be the largest IPO ever. This is having an impact and as I mentioned the other day, some investors were likely doing some selling to raise cash so that they can put a piece of Alibaba in their portfolios. It will be very popular.
The SPY (S&P 500 / C-fund) actually made a new intraday high yesterday. It broke out from a falling pattern wedge (and a bull flag) on Tuesday, and while the action was volatile on Wednesday, the bull flag remains very much intact.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow made a new all-time high yesterday and the flag pattern looks fairly bullish for stocks, if the indices can hold above the top of the flag in the short-term.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-Fund) is still lagging and as you can see there has been no breakout here. There was a possible negative reversal day yesterday and the index backed down from the 20-day EMA after breaking above it in early action. On the positive side, it closed for a second straight day above the 50-day EMA after closing below it for just one day.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index, the index that I consider to be the market leader, broke out to new highs and has now broken above two consecutive bull flags. This is positive action.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE / I-fund) could not follow through on Tuesday's larger positive outside reversal day, but it did hold again at the 200-day EMA. The action on Tuesday looked very promising, but on the whole this chart needs help. This test of the prior lows and 200-day EMA is key.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The main problem for the I-fund has been the strength in the dollar (UUP). This is the daily chart of UUP from Wednesday, and it is why the I-fund struggles compared to U.S. stocks.
The AGG (Bonds / F-fund) continued its decline yesterday and the Fed was the catalyst. Like the IEF that we showed yesterday, the AGG filled the overhead open gap before the Fed announcement, but bonds declined afterward.
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 TSP Talk Market Commentary
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.
