Stocks continued their volatile ways on Friday as the Dow jumped 167-points, and that means every day last week produced a triple digit move in the Dow. Three were negative and one was positive.
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The I-fund didn't get the benefit of the late surge in U.S. stocks, plus the dollar was up sharply again, so it lagged gaining just 0.12% on Friday. Bonds pulled back as they continue to move counter to stocks.
The SPY (S&P 500 / C-fund) had a down week last week, but Friday's rally helped keep it from being too bad. There's a falling wedge pattern (red) that actually looks promising (falling wedges tend to break upward) for the short-term, but the large wedge (black) is rising and it has already broken down. The S&P also recaptured the 50-day EMA after falling below it for a day on Thursday.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart of the S&P 500 shows that the index is still in a long-term rising trading channel with no real signs of trouble. The trouble we have seen has come in the form of a small cap index.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-Fund) fell below the 200-day EMA on Thursday, and like the S&P 500's 50-day EMA recovery, the Wilshire recaptured the 200-day EMA on Friday after one day below it. The August lows are still holding but this chart is far from out of danger.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
This long-term monthly chart of the Russell 2000 (small caps) has been in a very long consolidation. It's almost flag-like, which would be bullish, but it could also be that the double top is holding as a long-term market peak. But until it falls below the bottom of that box, the peak theory is just one of the possibilities. It could actually fall all the way down to the bottom of the rising channel and still be considered in a bullish position, but that would be a sharp loss from where it is now if it happened.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE / I-fund) is having technical difficulties. Four closes below the 200-day EMA is not very bullish, but recapturing the August lows on Friday is a slightly positive sign. Thursday's low near 64.50 may be the line in the sand.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Wednesday is October 1st and while we see a lot of red scattered within its seasonality chart, historically October is not a bad month. Much of the historical gains have in the stock market come during the fourth quarter, and October is a big part of that. Particularly during mid-term election years.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
This chart shows us how bad Septembers are, and how good Octobers are, during mid-term election years. Look at the difference between October during non-mid-term years compared to mid-term years.
Chart provided courtesy of www.chartoftheday.com, analysis by TSP Talk
The AGG (Bonds / F-fund) was down on Friday but it actually closed well off the lows creating a positive reversal day. Is the rally going to stall here near 109? If stocks can bottom in October, that may be the case. Otherwise investors will go back to using bonds as a safe haven.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
We get the September jobs report on Friday. I'll post the estimates later this week and we'll get the jobs report contest going in the forum.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the Sentiment Survey Results and its 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
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.
