Stocks tumbled toward the end of last week triggered by some weak data out of China and trouble with emerging markets. Add to that a Fed who is ready for another round of tapering of QE, and investors got a little spooked.
Here are the weekly, monthly, and annual TSP fund returns through Friday, January 24…
The S&P 500 (SPY / C-fund) broke below a rising wedge pattern on Thursday and fell below the 20-day EMA. Friday opened sharply lower and the index fell through the 50-day EMA. That’s a red flag. There is some support right where it closed on Friday and the bulls would really like to see this hold or we could be seeing the start of a new descending trend.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
We’ve been watching this 1929 comparison chart for several weeks now, partially for entertainment purposes, but it is an actual chart pattern (called 3 peaks and a domed house) and the “what if” possibility kept us somewhat interested. We’re in a bull market and buying the dips is usually the way to play them, but I guess this chart is telling us that things can get worse.
Source: www.mcoscillator.com
Investors have been moving to bonds, and as I have said before, bond traders are generally more savvy than the typical stock investor and perhaps the bond traders have been trying to tell us something all year after they bottomed at the end of 2013.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds are in a bear market so the resistance from the 200-day EMAs will be interesting tests for these charts.
The last week in January has a historically positive bias for stocks, but whether that will matter in this environment remains to be seen.
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
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