Stocks pulled back yesterday but the damage was contained and so far nothing serious here. The Dow lost 50-points and the C, S, and I Funds all lost less then 0.50%. Bonds were up as yields dipped and are testing support. [TABLE="width: 80%, align: center"]
[TR]
[TD="width: 310"]
[TD="align: center"] Daily TSP Funds Return[TABLE="width: 159"]
[TR]
[TD="align: right"] G-Fund:[/TD]
[TD="align: right"] +0.0197%[/TD]
[/TR]
[TR]
[TD="align: right"] F-fund:[/TD]
[TD="align: right"] +0.12%[/TD]
[/TR]
[TR]
[TD="align: right"] C-fund:[/TD]
[TD="align: right"] -0.47%[/TD]
[/TR]
[TR]
[TD="align: right"] S-fund:[/TD]
[TD="align: right"] -0.38%[/TD]
[/TR]
[TR]
[TD="align: right"] I-fund:[/TD]
[TD="align: right"] -0.20%[/TD]
[/TR]
[/TABLE]
[TABLE="width: 69%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 (SPY) broke its sharp rising trading channel and fell below the August high, but got a little support from the top of the nearest open gap. Yesterday's action could be a positive reversal formation, but the fact that it did not close near the highs may be a problem.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
But the Russell 2000 also saw a positive reversal formation and the small caps did close fairly close to the high of the day. The negative here is that the IWM also broke below rising trading channel.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar has been under a lot of pressure this month, and actually since the high was made on the UUP in July. There has been a breakdown on the chart moving the UUP to a 7 month low, and the recent bear flag does not look promising.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
A breakdown in the dollar would benefit the I-fund although it doesn't necessarily mean the I-fund will go up. Any percentage losses in the dollar would basically be tacked onto the return of the EAFE Index.
If the EAFE is up 1.0% and the dollar loses 0.50%, the I-fund gain would be closer to 1.5%.
If the EAFE is down 1.0% and the dollar loses 0.50%, the I-fund loss would be closer to -0.50%.
Bond yields moved lower again but the 10-year yield was able to remain above the 50-day EMA for a 4th straight day. If you keep knocking eventually someone opens the door, but you can see on the 10-year yield these consolidations near an EMA have turned into bottoms this summer. This is the first test of the 50-day EMA however, after the 20-day EMA was broken.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The stock market is in a little pullback right now and whether it becomes serious or not remains to be seen. We've witnessed a few 3% to 5% pullbacks this year and those who have bet on something more severe this year have been wrong each time.
Is it different this time? Perhaps because of the continuing resolution and debt ceiling fiasco it will be, but that could all be over by the first week in October, if they can come to some kind of resolution in Washington. The deadline is September 30 for the continuing resolution.
In today's TSP Talk Plus report we'll take at the NYSE overbought / oversold indicator. we'll also check out the divergence on the NYSE new highs list. Plus we'll look at the longer term bonds and what is developing there. 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 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.
