It was a very choppy day of trading in front of the start of today's tariff day. The Dow closed in negative territory but it had been down nearly 300-points in early trading and the broader indices all did well - particularly the Nasdaq as big tech had a strong day. Bond yields continue to sink and that is helping the F-fund. The small caps of the S-fund led the TSP funds yesterday, and the I-fund kept pace with the S&P 500.
We can see the battle going on between the bulls and the bears yesterday. Monday's low did not get taken out despite the early attempt, but the bulls failed to keep late morning rally above the break even mark -- that is until another rally kicked in during the final hour of trading. That late money is generally considered smart money. Is it brave money buying into today's start of the tariffs, or do they know something?
Based on the charts, there's a pretty good case for a move in either direction out this current area, but fundamentally it could all depend on how the tariffs are interpreted and play out, and that could take time to know. As we've been saying, there is a chance that we will see a buy the news reaction, after several week of selling the rumor. Perhaps it could easily go the other way as some believed Trump might pull the tariffs before they are implemented. Well, that day is here and we should know soon enough.
Here's the S&P 500 (C-fund) and we can see that it is sitting close to the lows of a 6-week decline, and it is sitting above that 300-day EMA. That's not an an average I have used very often but after it fell below the key 200-day EMA I used to find the next potential support below it. So far it has been tested twice and held both times.
The double bottom is a viable formation for a low to form and if the tariff situation either eases or is priced in, we could see more upside. However, the upside may be limited because there is a plethora of overhead resistance, particularly near 5700, including the broken support from the 200-day EMA.
The 10-year Treasury Yield was actually up slightly last month after bottoming on the first trading day in March. But in that mostly sideways action a large bear flag was forming. Yesterday the yield retested that March low after a breakdown from that bear flag. That 4.15% area is key support and it also happens to be the neckline of a large head and shoulders pattern (blue.) If that fails to hold, the chart's initial target would be somewhere below 3.8%. That sounds good for interest rates, however it may be a troubling sign for the economy.
Why are yields falling? Economic uncertainty. Growth forecasts are even questionable for the Atlanta Fed. Their first quarter GDP Growth Estimate as of April 1 is either -3.7 percent, or -1.4% which they call their "alternative model growth estimate." With neither being positive, and one estimate deeply negative, it makes sense to see bond yields falling.
The yield could hold at the 4.15% support line and bounce and that would be bad news for the F-fund, but if it doesn't hold, the F-fund could be leading the TSP Funds like it did in February. You can see the bull flag on the BND (Bonds / F-fund) is trying to break out. Will it, or do we have a triple top pullback coming in bonds? You probably came here for clarity but I'm asking a lot of question today, aren't I?
The large cap techs of the Nasdaq 100 had a nice day yesterday and you can see that the index needed it. Unlike the S&P 500 and the S-fund's DWCPF chart, this one did not make a double bottom low, but rather a lower low. It has since bounced back from that low, but technically this has a lot of work to do to improve.
Of course the reason this is important is because big tech, especially the Magnificent 7 stocks, have a large impact on the S&P 500 / C-fund.
Today there will be some kind of a ceremony to kick off the tariffs at 4PM ET, after the stock market closes, and on Friday we will get the March Jobs Report. Estimates for the employment data are looking for a gain of 130K to 145K jobs and an unemployment rate of 4.1%, although Briefing.com is expecting 4.2%.
The March TSP Talk AutoTracker winners have been posted in the forum. Congratulations to tom1tom1 for the 3.15% gain in the month, plus the other top finishers. Get in on the action - it's free!
The DWCPF (S-fund) continued Monday's positive reversal off the successful test of the lows. How high this rebound goes may tell us whether this is just the start of a right shoulder in a bearish head and shoulders pattern, or an actually start to rally off of a double bottom low but it must take out that 2131 area to even start to look bullish.. Head and shoulders patterns, especially in a downtrend, are very bearish.
The ACWX (I-fund) rebounded with the US market and it closed back above its 50-day EMA, but it is still below the broke support line of the F-flag pattern. These are generally typically formations and may lead to more downside, but you can see that support held again at the prior peak, along with the orange 100-day EMA earlier this week.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
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 may use additional methods and strategies to determine fund positions.
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Based on the charts, there's a pretty good case for a move in either direction out this current area, but fundamentally it could all depend on how the tariffs are interpreted and play out, and that could take time to know. As we've been saying, there is a chance that we will see a buy the news reaction, after several week of selling the rumor. Perhaps it could easily go the other way as some believed Trump might pull the tariffs before they are implemented. Well, that day is here and we should know soon enough.
Here's the S&P 500 (C-fund) and we can see that it is sitting close to the lows of a 6-week decline, and it is sitting above that 300-day EMA. That's not an an average I have used very often but after it fell below the key 200-day EMA I used to find the next potential support below it. So far it has been tested twice and held both times.
The double bottom is a viable formation for a low to form and if the tariff situation either eases or is priced in, we could see more upside. However, the upside may be limited because there is a plethora of overhead resistance, particularly near 5700, including the broken support from the 200-day EMA.
The 10-year Treasury Yield was actually up slightly last month after bottoming on the first trading day in March. But in that mostly sideways action a large bear flag was forming. Yesterday the yield retested that March low after a breakdown from that bear flag. That 4.15% area is key support and it also happens to be the neckline of a large head and shoulders pattern (blue.) If that fails to hold, the chart's initial target would be somewhere below 3.8%. That sounds good for interest rates, however it may be a troubling sign for the economy.
Why are yields falling? Economic uncertainty. Growth forecasts are even questionable for the Atlanta Fed. Their first quarter GDP Growth Estimate as of April 1 is either -3.7 percent, or -1.4% which they call their "alternative model growth estimate." With neither being positive, and one estimate deeply negative, it makes sense to see bond yields falling.
The yield could hold at the 4.15% support line and bounce and that would be bad news for the F-fund, but if it doesn't hold, the F-fund could be leading the TSP Funds like it did in February. You can see the bull flag on the BND (Bonds / F-fund) is trying to break out. Will it, or do we have a triple top pullback coming in bonds? You probably came here for clarity but I'm asking a lot of question today, aren't I?
The large cap techs of the Nasdaq 100 had a nice day yesterday and you can see that the index needed it. Unlike the S&P 500 and the S-fund's DWCPF chart, this one did not make a double bottom low, but rather a lower low. It has since bounced back from that low, but technically this has a lot of work to do to improve.
Of course the reason this is important is because big tech, especially the Magnificent 7 stocks, have a large impact on the S&P 500 / C-fund.
Today there will be some kind of a ceremony to kick off the tariffs at 4PM ET, after the stock market closes, and on Friday we will get the March Jobs Report. Estimates for the employment data are looking for a gain of 130K to 145K jobs and an unemployment rate of 4.1%, although Briefing.com is expecting 4.2%.
The March TSP Talk AutoTracker winners have been posted in the forum. Congratulations to tom1tom1 for the 3.15% gain in the month, plus the other top finishers. Get in on the action - it's free!
The DWCPF (S-fund) continued Monday's positive reversal off the successful test of the lows. How high this rebound goes may tell us whether this is just the start of a right shoulder in a bearish head and shoulders pattern, or an actually start to rally off of a double bottom low but it must take out that 2131 area to even start to look bullish.. Head and shoulders patterns, especially in a downtrend, are very bearish.
The ACWX (I-fund) rebounded with the US market and it closed back above its 50-day EMA, but it is still below the broke support line of the F-flag pattern. These are generally typically formations and may lead to more downside, but you can see that support held again at the prior peak, along with the orange 100-day EMA earlier this week.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
Posted daily at www.tsptalk.com/comments.php
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 may use additional methods and strategies to determine fund positions.
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