Another triple digit move for the Dow yesterday - this one a 275-point gain. These large swings are making our necks sore. It's like watching a tennis match. The TSP funds saw solid gains across the board, and even bonds were up.
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The I-fund lagged but the dollar was down and the big gains came late in the U.S. market so expect a boost today.
Alcoa kicked off the 3rd quarter earnings season with a solid report beating estimates handily. Not usually a big market mover, Alcoa was up 2.3% after hours and perhaps it will give investors a reason to be optimistic about the coming slew of earnings reports.
The SPY (S&P 500 / S-fund) not only posted a positive reversal day, but it was an outside reversal day, meaning the low was lower than Tuesday's low, and the high was higher than Tuesday's high. That can be a longer-term reversal in the direction of the market - but of course not always. We've been fooled before, but this double reversal looks good.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) saw a positive kangaroo tail reversal, and that is usually good for at least some short-term follow-through to the upside, but this chart is still below the 200-day EMA and below the descending resistance line. It has some work to do to prove itself to us.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Russell 2000 (small caps) is in the same situation, but the positive outside reversal day is a little more of a bullish formation than the Wilshire chart.
Chart provided courtesy of www.stockcharts.comm, analysis by TSP Talk
The EFA (EAFE Index / I-fund) also posted a positive outside reversal day. Except for that, this chart looks awful, but it (the outside reversal) is a big plus. It is also so oversold that a snap-back rally could be big, especially if the dollar cooperates and pulls back.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) also rallied, to my surprise, and the breakout is now two days old. So far so good for bonds, but why yields went down (yields go down when bond prices go up) when stocks were soaring is an interesting development. I'm sure there is a reason, but I'm really just interested in the chart, not the reason.
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
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