TSP Talk – Chink in the Armor

The market was moving along nicely last week, looking like it was headed for yet another positive week, but those pesky problems in Greece are not going away and their inability to agree on the details of a bailout plan sent markets down around the world on Friday.

The Thrift Savings Plan’s website is performing maintenance and has not updated the share prices for Friday yet, so I don’t have the current weekly and monthly returns for you right now. Perhaps later this weekend.

Update: The TSP loaded Friday’s prices and here are the up to date weekly, monthly, and annual returns:

Friday’s 0.7% drop in the S&P 500 gave the index a loss 2.26 points on the week, which is a minor 0.16% decline. Certainly nothing too concerning after the recent gains, but we are starting to see some chinks in the armor that we’ll want to keep an eye on.

Many folks have been patiently waiting for a pullback so they can jump on the train they missed at the last station. But when we get a sharp decline like we saw on Friday, investors may start to second guess their desire to buy a dip. But the S&P 500 is still very much in its steep uptrend and remains above the 20 and 50-day EMA’s, and until that changes I don’t think there is too much to worry about. But keep reading.

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

The Nasdaq, one of the market leaders, is also still trending higher but you can see that if the trading channel breaks, support it quite a way down. The chart looks good but a pullback could be sharp if it happens within the next week or so.

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

Here’s the concern: The Dow Transportation Index is the (thee) market leader and it is showing signs of wearing down. The rising trading channel and the 20-day EMA have broken. That’s nothing that a strong Monday can’t fix, but if we don’t see a bounce early next week, I’d expect to see a test of the 50-day EMA, and next would be the support line created by the December highs.

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

A pullback from the recent relentless rally would be welcomed by a lot of people. The question is, will buyers step up quickly to keep the market from experiencing too much damage, or will the problems in Greece continue to pressure on the global markets? That’s what is in store for us next week.

I will update this blog with last week’s returns once the TSP posts Friday’s share prices.

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.

Tom Crowley
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.

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