TSP Talk Weekly Wrap Up

It was a big week for the stock funds as investors were positioning themselves in front of the debt deal announcement, which we knew would eventually come. The surprise was not that we had a “buy the rumor” reaction before the deal was made, but that the buying continued after the deal was made when it seemed we were set up for a “sell the news” reaction. Stocks closed the week with many indices making new all-time highs. Bonds also rallied on the done deal.

Earnings season moved into high gear as we saw a mixed bag from some major companies, but the market reaction was obviously bullish.

Here are the weekly, monthly, and annual TSP fund returns through Friday, October 18…

The S&P 500 (SPY) has moved virtually straight up since the low made during the prior week. It has been up 7 of the last 8 trading days and pointing higher. The short-term problem is, there is resistance directly overhead, and that open gap near 166 will be a target should we get a pullback.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

This longer-term chart shows that the intermediate-term resistance (blue) is being tested now and that’s fairly strong resistance, although the Nasdaq and small caps have already broken above their similar resistance lines. The longer-term trading channel (red) does have a lot of room on the upside if the S&P 500 can get above that first level of resistance.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

Last week were looking at bullish flag formations on the bond charts and after the debt deal was made we saw those flags break to the upside.

The 50-day EMA held as support during the pullback. The problem may be in the short-term as there is a new open gap down below 102 on this 7 to 10 year bond fund ETF chart.

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at http://www.tsptalk.com/comments.html.

Tom Crowley
www.tsptalk.com
Weekly Wrap-Ups Archive
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The legal stuff: This information is for educational purposes only! This is not advice or are commendation. 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.