Stocks rebounded on Thursday as volatility continues and we saw yet another triple digit move in the Dow. Facebook had a big gain after strong earnings and that helped tech stocks and the Nasdaq, but after the close earnings were mixed with Amazon getting hit hard. Bonds (F-fund) and the I-fund were both down slightly.
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In January 2013, there was one triple digit move in the Dow and one day with a move of 1% or higher. So far in 2014 we've had 8 triple digit moves in the Dow (plus one 90-point day) and 4 moves of at least 1%. I think it's safe to say things are different this year.
The S&P 500 (SPY) is starting to resemble every 2013 pullback low, but as we just said, 2014 seems to be a little different. The chart is shaping up as either "V" bottom, or a bear flag (which have the tendency to break down). I know we had this dilemma several times in 2013 and every one ended with a "V" bottom. Will it be "different this time?"
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The annual chart shows that support is fairly strong and rising. It would take a market altering move to breakdown below that support, and as we mentioned over and over for the last month or so, the 1929 crash comparison is still in play, and that would be market altering. It's getting close to make or break.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq had a big day thanks to strong earnings from Facebook, and when a large tech company does well, it bodes well for the smaller companies that help feed the monster. There is potential resistance at yesterday's high on the QQQ (Nasdaq 100) as old support, once broken, can act as resistance. And with Amazon getting pounded after their weak earnings report, the Thursday's rally in the Nasdaq may be a tough act to follow. Google was up after hours after releasing earnings, so maybe we'll have a wash?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transportation Index had a big day as well, but the resistance at the 20-day EMA, as well as the big bear flag, are concerns. Like the S&P, the question is whether the bear flag, or support and "V" bottom will win out.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Here is the Seasonality chart for February. It's the only below average month between November to April. The beginning of the month has a modestly positive bias but things get dicey after that.
Chart provided courtesy of www.sentimentrader.com
Bonds were down although they finished off their opening lows, hence the white candlesticks. The rising trend is intact and both the TLT and the IEF remain above their 200-day EMAs. That's two closes above for the IEF, and 5 for the TLT.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
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Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at TSP Talk Market Commentary
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