Stocks were down modestly on Friday with early gains fading as the day went on. The Dow has still not been able to hit the 20,000 level, coming up 50-points short on three different occasions last week. The FOMC interest rate hike week saw losses in all of the stock and bond TSP funds, with the S-fund the laggard losing 1.37%.
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One thing to note about Dow 20,000. When the Dow initially hit 10,000 in 1999, it eventually crossed that 10,000 level 67 times over the next decade before finally remaining above it since 2010. These are emotional milestones.
The SPY (S&P 500 / C-fund) is either forming a bull flag or starting to rollover here. Volume should start to dry up which could favor the bulls as traders who bet against the market tend to back off this time of year. The problem is there are a lot of potential gains that could be taken off the table from traders, investors, and money managers, to lock in their 2016 gains.
The weekly chart of the S&P 500 has hit the top of a large trading channel last week and backed off a little. There's a lot of room below so that may be the path of least resistance, but the channel is rising and that means the resistance is also rising.
The DWCPF (S-fund) has formed a possible bull flag (blue), which is a bullish formation, but it also broke down below its rising support line last week.
The Dow Transportation Index has been the leader of this 3rd quarter rally but it too has been pulling back to take a breather. There's not a heck of a lot of support on these charts because of the vertical rally they have been in. If the pullback continues the Transports may be relying on the 20-day EMA for support. After that it's quite a drop to the 50-day EMA.
The EFA (I-fund) posted a small gain on Friday but may be forming a bear flag here. There is an open gap that may need filled near 57.75.
The High Yield Corporate Bonds fund has remained near its highs although it has not been able to break out yet. It's in a rising trading channel but there is a lot of resistance near the old highs.
The AGG (bonds / F-fund) closed with a small gain as the spinning top formation may be indicating at least some interest in bonds to start the week.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the 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 www.tsptalk.com/comments.php
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