Stocks rallied sharply on Thursday as we saw more crooked percentage gains in the S&P 500, Nasdaq, and the small caps on the day. The relief rally is gaining some momentum, but now it has a wall of resistance to deal with. Yields and the dollar cooperated as both were down yesterday helping both the stock market and the bond market.
After the closing bell yesterday Alphabet (GOOG) was the second Magnificent 7 stock to report earnings and they did quite well, and the stock was up almost 5% after hours, last I checked. That's the good news. The bad news is some less influential companies like Intel and T-Mobile were down sharply after reporting. GOOG should help the indices but we should keep an eye on the market breath, or advance / decline numbers.
Is anyone else getting whiplash? The S&P 500 (C-fund) has been moving 400 - 600 points in both directions all month. Now we don't have to look far to see the important pivot point with heavy resistance overhead, but with momentum turning toward the bulls. That PMO momentum indicator has zoomed past its moving average, which is a good sign, but that gap is still open below 5300. However there is a catch to that gap.
I posted this in the forum on Thursday morning noting that the overnight futures were down heavy (actually 4 am Thursday morning) and that gap was filled. That never happened to the S&P 500 after the opening bell rang.
Once in a while we see gaps on the S&P 500 stay open a long time... but not in the futures market. It is very rare to see a gap stay open on the S&P 500 futures for more than a day or two, so there's an argument that the gap near 5300 on the S&P 500 may be left open for a while.
And again to the 2020 comparison -- the fake out negative reversal was just that on Wednesday as the rally resumed on Thursday.
If there's an argument for the bear side other than all of the resistance on the index charts, it's the 10-year Treasury Yield, which has been holding at support near 4.3% repeatedly and it's starting to look like a bull flag. Nothing could kill this rally like a quick move above 4.5% on the 10-year yield. OK, maybe a bearish Trump tweet.
The dollar was down yesterday but the I-fund still lagged US stocks. Probably because of addition buying pressure from a short squeeze in US stocks and the better bargains with the S&P 500 being closer to its recent low than its high, while the I-fund (ACWX) is already flirting with its all time high.
Is anybody else ready for the weekend. It's been wild out there.
DWCPF (S-fund) is in a very similar situation as the S&P 500. There are a lot of good signs out there for the market, but there's also a lot of resistance on these US charts. If that resistance can be taken out here, then there's an open gap and the 50-day EMA up near 2100, so there's possibly more room to run.
The BND (F-fund) was up nicely on Thursday but I still have some concerns based on this chart and the 10-year Treasury. Is that a bear flag, or a rising wedge? Those are both bearish formations. 72.50 looks like a line in the sand.
Thanks so much for reading! Have a great weekend!
Tom Crowley
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
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Is it time for the market to move to the next level or has the "bear market" rally run its course? Bear market is in quotes because there are many definitions of a bear market and some were met and others were not. But call it what we will, the questions remains: Is the bottom in? Is the market ready to break through resistance? Does it need some sideways consolidation first? Or is a test of the lows needed? After the closing bell yesterday Alphabet (GOOG) was the second Magnificent 7 stock to report earnings and they did quite well, and the stock was up almost 5% after hours, last I checked. That's the good news. The bad news is some less influential companies like Intel and T-Mobile were down sharply after reporting. GOOG should help the indices but we should keep an eye on the market breath, or advance / decline numbers.
Is anyone else getting whiplash? The S&P 500 (C-fund) has been moving 400 - 600 points in both directions all month. Now we don't have to look far to see the important pivot point with heavy resistance overhead, but with momentum turning toward the bulls. That PMO momentum indicator has zoomed past its moving average, which is a good sign, but that gap is still open below 5300. However there is a catch to that gap.
I posted this in the forum on Thursday morning noting that the overnight futures were down heavy (actually 4 am Thursday morning) and that gap was filled. That never happened to the S&P 500 after the opening bell rang.
Once in a while we see gaps on the S&P 500 stay open a long time... but not in the futures market. It is very rare to see a gap stay open on the S&P 500 futures for more than a day or two, so there's an argument that the gap near 5300 on the S&P 500 may be left open for a while.
And again to the 2020 comparison -- the fake out negative reversal was just that on Wednesday as the rally resumed on Thursday.
If there's an argument for the bear side other than all of the resistance on the index charts, it's the 10-year Treasury Yield, which has been holding at support near 4.3% repeatedly and it's starting to look like a bull flag. Nothing could kill this rally like a quick move above 4.5% on the 10-year yield. OK, maybe a bearish Trump tweet.
The dollar was down yesterday but the I-fund still lagged US stocks. Probably because of addition buying pressure from a short squeeze in US stocks and the better bargains with the S&P 500 being closer to its recent low than its high, while the I-fund (ACWX) is already flirting with its all time high.
Is anybody else ready for the weekend. It's been wild out there.
DWCPF (S-fund) is in a very similar situation as the S&P 500. There are a lot of good signs out there for the market, but there's also a lot of resistance on these US charts. If that resistance can be taken out here, then there's an open gap and the 50-day EMA up near 2100, so there's possibly more room to run.
The BND (F-fund) was up nicely on Thursday but I still have some concerns based on this chart and the 10-year Treasury. Is that a bear flag, or a rising wedge? Those are both bearish formations. 72.50 looks like a line in the sand.
Thanks so much for reading! Have a great weekend!
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
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 may use additional methods and strategies to determine fund positions.
