Another big rally hits Wall Street yesterday as stocks opened higher but the early modest gains turned into big gains the more the new Fed Chairman (or is it Chairperson) Janet Yellen spoke. The Dow gained 193-points and we saw gains near 1% across the board. Bonds were down.
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The S-fund had a nice day, but again lagged the S&P 500, which is becoming a trend.
The S&P 500 (SPY) has made a parabolic move upward since the low one week ago today. The open gap near 184, which seemed so far away just a week ago, is now within reach of being closed, but the short-term indicators are getting quite extended to the overbought side. The 20-day EMA has made its way back above the 50-day EMA, and the index is back above the old support line, that broke down in January - both positive signs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The annual chart shows that the index is back in the middle of the rising trading channel, and it was able to recapture the 20 and 50-day EMAs without much difficulty. The PMO Indicator is curling up, although it has not yet crossed above its 10-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow also closed above its 20 and 50-day EMAs yesterday but it has not reached it's November high like the S&P has.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
That is worth mentioning because of the 1929 chart comparison where the Dow stalled at the left should peak (LS), creating a right shoulder peak (RS). Not that it has to be exact, but that would be an area of resistance, although the S&P 500 has broken through that, as I mentioned.
Chart provided courtesy of www.mcoscillator.com, analysis by TSP Talk
We've been discussing in Forum that there are now a lot of folks talking about this chart. Even the Drudge Report had a link to an article from Market Watch where they talked about this this chart. That doesn't totally remove the possibility of a breakdown like '29, but the more eyes on it probably lessens the likelihood. Everyone can't be right.
Bonds were down and these two bond ETFs continue to flirt with the 200-day EMA - both of which are basically holding.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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