Stocks came jumping out of the starting gate on Monday morning with another gap up opening. The Dow ended the day up 259-points, or +1%, leading the way percentage-wise as the positive trade news helps the global companies more than small caps. Speaking of small caps, the Russell 2000 was up just 0.16%. A good day normally, but well below the large cap indices. The S-fund, which is a mixture of small and mid-sized companies, gained 0.4%.
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It seems to be all about the dollar lately. If the dollar is down, stocks go up. If the dollar is up, stocks go down. And recently the dollar has been going down. Of course right now the dollar is moving in relation to trade negotiations so yesterday's new deal with Mexico pushed the dollar lower and stocks higher. The dollar UUP chart hit some support yesterday that will be an interesting test going forward.
So much for our Labor Day Holiday seasonality chart which had the Monday before the holiday (5 days before the weekend) as the worst day on average of the week.
The question however is, how much of this is related to pre-holiday reversals and the light volume? Maybe not a lot, but it's usually a factor. And, if we do see a pullback for the rest of the week, that could be the reversal, and then we'd rally after the holiday. I guess you never know, and every year can be different. I'm just looking at the typical seasonality and holiday trends and individual years don't always follow the conventional wisdom.
The bulls remain in charge in this light trading environment, and we've seen rallies like this last a lot longer than seems reasonable, and we only have to go back to 2017 to see how frustrating it can get for the bears. But like the 2017 and early 2018 rally, these rallies can eventually end abruptly and with a thud, a la January and February 2018, so there may not be a lot of warning. Complacency may get the money right now, but the nimble may get the last laugh. Remember, it just took seven months fir the S&P to get back the losses from that week long decline back then. And for the Dow, it's not even there yet.
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[TD] It's that time of year again... time for the annual Last Man Standing NFL Contest. It's free.
More Information: Last Man Standing Contest
http://www.tsptalk.com/mb/site-news-and-announcements/30639-last-man-standing-2018-a.html
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The S&P 500 / C-fund gapped up again, and as we've shown several times this year, some of the gaps become traps as the peaks are made within a day or so before we've seen a pullback. The red arrows represent those gap traps while the green arrows were more gap and runs.
The small caps (S-fund) made another new high but created a possible negative reversal in the process.
A longer-term view shows that the gap up pushed it above that long-term resistance line. So the question is, was this a breakout, or will the negative reversal make it a fake out?
The EAFE (I-fund) had a big day as we might expect when the dollar drops 0.4%. The high yesterday filled that large open gap (blue) from earlier in the month, but it opened up another smaller gap (red) on the downside.
The AGG (bonds) was down on the day and while it moved back below the rising support line off the August 1 low, it remains above that longer-term rising resistance line, which may now try to act as support.
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
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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 use additional methods and strategies to determine fund positions.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="align: center"]
[/TR]
[/TABLE]
It seems to be all about the dollar lately. If the dollar is down, stocks go up. If the dollar is up, stocks go down. And recently the dollar has been going down. Of course right now the dollar is moving in relation to trade negotiations so yesterday's new deal with Mexico pushed the dollar lower and stocks higher. The dollar UUP chart hit some support yesterday that will be an interesting test going forward.
So much for our Labor Day Holiday seasonality chart which had the Monday before the holiday (5 days before the weekend) as the worst day on average of the week.
The question however is, how much of this is related to pre-holiday reversals and the light volume? Maybe not a lot, but it's usually a factor. And, if we do see a pullback for the rest of the week, that could be the reversal, and then we'd rally after the holiday. I guess you never know, and every year can be different. I'm just looking at the typical seasonality and holiday trends and individual years don't always follow the conventional wisdom.
The bulls remain in charge in this light trading environment, and we've seen rallies like this last a lot longer than seems reasonable, and we only have to go back to 2017 to see how frustrating it can get for the bears. But like the 2017 and early 2018 rally, these rallies can eventually end abruptly and with a thud, a la January and February 2018, so there may not be a lot of warning. Complacency may get the money right now, but the nimble may get the last laugh. Remember, it just took seven months fir the S&P to get back the losses from that week long decline back then. And for the Dow, it's not even there yet.
[TABLE="align: center"]
[TR]
[TD] It's that time of year again... time for the annual Last Man Standing NFL Contest. It's free.
More Information: Last Man Standing Contest
http://www.tsptalk.com/mb/site-news-and-announcements/30639-last-man-standing-2018-a.html
[/TD]
[/TR]
[/TABLE]
The S&P 500 / C-fund gapped up again, and as we've shown several times this year, some of the gaps become traps as the peaks are made within a day or so before we've seen a pullback. The red arrows represent those gap traps while the green arrows were more gap and runs.
The small caps (S-fund) made another new high but created a possible negative reversal in the process.
A longer-term view shows that the gap up pushed it above that long-term resistance line. So the question is, was this a breakout, or will the negative reversal make it a fake out?
The EAFE (I-fund) had a big day as we might expect when the dollar drops 0.4%. The high yesterday filled that large open gap (blue) from earlier in the month, but it opened up another smaller gap (red) on the downside.
The AGG (bonds) was down on the day and while it moved back below the rising support line off the August 1 low, it remains above that longer-term rising resistance line, which may now try to act as support.
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
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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 use additional methods and strategies to determine fund positions.
