Stocks opened higher on Tuesday, fell sharply in late morning trading, but stabilized and ended the day mixed. The Dow lost 44-points but the S&P 500 and small caps had solid positive days. The I-fund played a little payback, and bonds were up slightly.
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The S&P 500 (SPY) produced a positive outside reversal day - a bullish short-term formation - and closed just short of new highs. We saw breakouts from similar consolidations back November and December. We didn't have earnings reports being released during those months and earnings have been a little off this quarter so far. IBM and AMD were both hit hard after hours yesterday and that could put some pressure on the Dow and the Nasdaq today. The futures are down modestly as I write this. Will the dip buyers show up again?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps have performed very well, something they are accustomed to doing in January and that it what is called the "January Effect." The positive reversal day up to new highs looks quite bullish, and there's not any immediate overhead resistance. The only concern technically might be the rising wedge that is forming.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The I-fund played a little give back to Friday's overpricing. The dollar was up early yesterday hurting the I-fund a bit, but the late weakness in the dollar could help Wednesday's I-fund price.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were mixed yesterday with the longer-term bonds outperforming the intermediate-term bonds. They both have open gaps down below, and the TLT actually just filled a gap left open back in early November. The short-term trend in bonds is up.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The intermediate-term descending trading channel on the IEF is now testing the top of its range and with that gap open below, this is an interesting test for the 7 to 10-year bond fund.
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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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