Stocks open slowly on Thursday, but rallied and finally put together a strong close after a few days of early gains and late selling. The Dow gained 74-points while the S&P and small caps gained about a half of a percent, and the I-fund lagged but the dollar lost steam later in the day so we should see an improvement on Friday. [TABLE="width: 79%, align: center"]
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The SPY (S&P 500) pushed to new highs, this time with a bit more authority, but not with a heck of a lot of volume.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Small caps also pushed to new highs after stalling at resistance for three days. Volume has also been drying up during the rally and the question is whether nervous investors will look at these new highs as a green light, or if they are still too timid after the nose bleed rally?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Transportation Index regained Wednesday's losses on Thursday, and its starting to look like a new rising trading channel has begun. So, we'll want to watch this possible new support line, which happens to be crossing near the 50-day EMA right now and that could be double support. That gap is still open and that being filled is what I am counting on.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The dollar was down slightly yesterday, but most of the weakness came later in the day and that is one reason why the I-fund lost ground yesterday, but it should see some help on Friday.. It looks like a bad bear flag has formed on the UUP, and that cold mean an eventually break down below support.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
That could help push the price of gold, silver, oil, etc., higher, and it would also be help for the I-fund. The EFA made new highs this week, and a breakdown in the dollar would likely keep it above the old highs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were up again on Thursday and this recent rally is concerning to me as far as the stock market goes. Bond traders are generally more savvy than stock traders, and they are worried about something. Perhaps they are pricing in some kind of a major fallout in the Ukraine?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Should that happen, the stock market may be a day late and a dollar short. Whatever it is that is going on out there, the bond market doesn't like it.
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Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at TSP Talk Market Commentary
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