Stocks ended the holiday shortened week last week with a solid rally, but a sharp, late profit taking sell-off near the close took the Dow off its 450-point highs of the day, to close up 255-points. There was some end of the quarter window dressing involved there for sure, but also some nerves heading into the long weekend may have made some of the bulls nervous. All in all, it was a good day for the stock market, which needed some relief.
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It was the end of a wild week, a wild month, and a wild first quarter for stocks, and after all of that, the TSP stock funds are up or down within about 1% of even for the year.
I don't want to read too much into an end of the quarter, pre-holiday rally, but heading into the long weekend there were plenty of excuses for investors and traders to be selling, but they didn't - at least not until the final hour of the day.
As you'll see in the index charts below, there are some good things happening, and some not so good. The bear flags are alarming to me since the downside targets would make for fairly steep losses, but we've also had a successful test of the February lows so far, so the Indices need some giddy-up from here to get away from that potential danger.
Bonds rallied again and whether it was pre-holiday rally that will reverse after the holiday remains to be seen, but bonds also had every excuse, including a large bear flag on the chart, to break down, but they did not. So perhaps they are ready for some relief?
Admin Note: If anyone is interested in our free annual Master's Golf Tournament Pool, please click here for more info.
The S&P 500 / C-fund rallied strongly on Thursday but it is far from out of the woods yet. The 200-day EMA has held well so far although those bear flags look a bit ominous. Until this can get back above the descending resistance and the 50-day EMA I will still be concerned about a potential breakdown, but support holding is a plus.
The small caps / S-fund have held up slightly better than the large caps, probably because of the Tariff and trade war talk which impact small caps less than the larger international companies. The blue dashed line shows some immediate resistance that will be of importance today.
The Dow Transportation Index is in a bear flag like most of the major indices and last week it flirted with the bottom of that flag every day. The 50-day EMA is just overhead and will be the resistance test for this week.
The EAFE Index / I-fund broke below its bear flag recently, and while it held above the 200-day EMA, it is also testing the bottom of its flag for possible resistance.
The High Yield Corporate Bond Fund, which is usually a good indicator for stocks, moved back above its 200-day EMA on Thursday and it is now testing the 50-day EMA, which has been the top of its recent range. This does look like a big bull flag now so that's one positive for stocks - if it can breakout.
The AGG (bonds / F-fund) rallied strongly on Thursday and above some key resistance levels. Whether that was a pre-holiday reversal or not should be known fairly quickly this week, as the downside would resume right away. Otherwise, can bonds finally be out of their downtrend?
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.
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It was the end of a wild week, a wild month, and a wild first quarter for stocks, and after all of that, the TSP stock funds are up or down within about 1% of even for the year.
I don't want to read too much into an end of the quarter, pre-holiday rally, but heading into the long weekend there were plenty of excuses for investors and traders to be selling, but they didn't - at least not until the final hour of the day.
As you'll see in the index charts below, there are some good things happening, and some not so good. The bear flags are alarming to me since the downside targets would make for fairly steep losses, but we've also had a successful test of the February lows so far, so the Indices need some giddy-up from here to get away from that potential danger.
Bonds rallied again and whether it was pre-holiday rally that will reverse after the holiday remains to be seen, but bonds also had every excuse, including a large bear flag on the chart, to break down, but they did not. So perhaps they are ready for some relief?
Admin Note: If anyone is interested in our free annual Master's Golf Tournament Pool, please click here for more info.
The S&P 500 / C-fund rallied strongly on Thursday but it is far from out of the woods yet. The 200-day EMA has held well so far although those bear flags look a bit ominous. Until this can get back above the descending resistance and the 50-day EMA I will still be concerned about a potential breakdown, but support holding is a plus.
The small caps / S-fund have held up slightly better than the large caps, probably because of the Tariff and trade war talk which impact small caps less than the larger international companies. The blue dashed line shows some immediate resistance that will be of importance today.
The Dow Transportation Index is in a bear flag like most of the major indices and last week it flirted with the bottom of that flag every day. The 50-day EMA is just overhead and will be the resistance test for this week.
The EAFE Index / I-fund broke below its bear flag recently, and while it held above the 200-day EMA, it is also testing the bottom of its flag for possible resistance.
The High Yield Corporate Bond Fund, which is usually a good indicator for stocks, moved back above its 200-day EMA on Thursday and it is now testing the 50-day EMA, which has been the top of its recent range. This does look like a big bull flag now so that's one positive for stocks - if it can breakout.
The AGG (bonds / F-fund) rallied strongly on Thursday and above some key resistance levels. Whether that was a pre-holiday reversal or not should be known fairly quickly this week, as the downside would resume right away. Otherwise, can bonds finally be out of their downtrend?
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.
