It's always nice to see the market behave the way technical analysis might dictate. Stocks followed through on Tuesday, to Monday's positive reversal day. We saw a strong open, but by the close things drifted a little lower as investors' nerves may have gotten the best of them with the FOMC meeting and potential rate hike on today's docket.
The Dow gained 156-points while the S&P and small caps each jumped over 1%, and the Transports added 082%. The I-fund lagged because of a strong move higher in the dollar.
[TABLE="width: 89%, align: center"]
[TR]
[TD="width: 180, align: center"]
[/TD]
[TD="width: 49, align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TABLE="width: 69%, align: center"]
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Be careful! The trading will be volatile and very emotional and will very likely move in one direction after the meeting, and in the other in the days following the meeting. It will try to confuse us at every opportunity. Our best bet would be no surprises and a non-reaction in the market. Not likely, but it would produce less volatility in the following days. It's been a long time since we've had a rate hike, and this is one of the most anticipated interest rate decisions and policy statements since the QE days.
From sentimenTrader.com: "Over the past 20 years, there have been 21 times the S&P rose 1% or more the day before the meeting. It added to its gains on the day of the meeting 43% of the time. From the day of the meeting to two days later, it rose only 33% of the time. So mostly weakness."
The SPY (S&P 500 / C-Fund) gained 1% on Tuesday but remains in the short-term descending channel. Tomorrow's action will likely obliterate the support and resistance lines - in which direction, I don't know. But we will likely have some new lines to draw.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart shows the S&P 500 has recaptured the 50-week EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) had a big day but it also remained in its short-term downtrend. There is an open gap near 1014 and if that can get filled, it will have to breakout above that descending resistance line to do it.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow may be creating a big bull flag here. It's not the cleanest formation, but that's a possible bull flag. Bull flags tend to break to the upside and with the positive seasonality kicking in, a breakout would make sense, but that interest rate thing may determine if the Dow visits the overhead flag resistance, or the support below first.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil continues to call the shots. It closed up 1.3% yesterday but like stocks, closed off the highs and this chart shows a possible negative reversal day. It was able to close back above the support line, which is a slight positive for this bearish chart.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The HYG High Yield Bond Fund gapped up and there are now 3 open gaps within reach. With the Fed decision we could see all three get filled, but where it ends up is the question.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) was flat but posted a positive reversal day and closed just north of the 200-day EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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.
The Dow gained 156-points while the S&P and small caps each jumped over 1%, and the Transports added 082%. The I-fund lagged because of a strong move higher in the dollar.
[TABLE="width: 89%, align: center"]
[TR]
[TD="width: 180, align: center"]
[TD="width: 49, align: center"][/TD]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
Be careful! The trading will be volatile and very emotional and will very likely move in one direction after the meeting, and in the other in the days following the meeting. It will try to confuse us at every opportunity. Our best bet would be no surprises and a non-reaction in the market. Not likely, but it would produce less volatility in the following days. It's been a long time since we've had a rate hike, and this is one of the most anticipated interest rate decisions and policy statements since the QE days.
From sentimenTrader.com: "Over the past 20 years, there have been 21 times the S&P rose 1% or more the day before the meeting. It added to its gains on the day of the meeting 43% of the time. From the day of the meeting to two days later, it rose only 33% of the time. So mostly weakness."
The SPY (S&P 500 / C-Fund) gained 1% on Tuesday but remains in the short-term descending channel. Tomorrow's action will likely obliterate the support and resistance lines - in which direction, I don't know. But we will likely have some new lines to draw.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart shows the S&P 500 has recaptured the 50-week EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) had a big day but it also remained in its short-term downtrend. There is an open gap near 1014 and if that can get filled, it will have to breakout above that descending resistance line to do it.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow may be creating a big bull flag here. It's not the cleanest formation, but that's a possible bull flag. Bull flags tend to break to the upside and with the positive seasonality kicking in, a breakout would make sense, but that interest rate thing may determine if the Dow visits the overhead flag resistance, or the support below first.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil continues to call the shots. It closed up 1.3% yesterday but like stocks, closed off the highs and this chart shows a possible negative reversal day. It was able to close back above the support line, which is a slight positive for this bearish chart.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The HYG High Yield Bond Fund gapped up and there are now 3 open gaps within reach. With the Fed decision we could see all three get filled, but where it ends up is the question.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) was flat but posted a positive reversal day and closed just north of the 200-day EMA.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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.
