The Dow gained another 40-points yesterday as the march toward 20,000 continues. Meanwhile the broader indices were down and there were actually over 1900 more stocks that closed down on the day in the NYSE and Nasdaq exchanges, than closed up. So while the media is cheering the new highs and Dow 20,000, don't dismiss some of the negatives that are stirring beneath the surface.
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The Fed's FOMC meeting is this Wednesday and it doesn't seem to be a question of if the Fed will raise rates, but how much information will we get about the next move on their part? I think the market has already fully priced in a rate hike in both stocks and bonds.
The SPY (S&P 500 / C-fund) made a new high early yesterday but drifted sideways to slightly lower the rest of the day. That spinning top candlestick formed yesterday tends to be bearish in the short-term, but at this point, even the bulls probably wouldn't complain about some kind of consolidation.
The DWCPF (S-fund) was down 0.84% yesterday while the Russell 2000 small cap index lost over 1%. So that negative breadth that I mentioned above, where 1900 more stocks closed down than up yesterday, was mostly due to the weakness in the Russell and the Nasdaq.
The Nasdaq 100 (QQQ) continues to hold near the high but it has been struggling to get above that 119.50 area.
The EFA (I-fund) paused after its big 5-day rally.
The price of oil gapped up at the open on Monday moving well above the prior highs and breaking above its trading channel. But it closed well off its early high and created a negative reversal day. It will be interesting to see if that old resistance line can now hold as support once that gap is filled - assuming it does get filled.
The AGG (bonds / F-fund) put in a bullish looking spinning top pattern but is flirting with the recent lows. Not the best looking chart but quite oversold in the short-term.
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Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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