Bulls don't back down

After the bears made push on Tuesday, the bulls fought back yesterday and we saw modest gains in the stock indices. The Dow gained 36-points while oil rallied back as well and made a new 2016 high.

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The next few days could be quite interesting as the Central Banks will take center stage. Today the ECB, or European Central Bank, will decide whether to inject fresh stimulus into the struggling European economy. Next week there is a two-day FOMC meeting and they will make a policy statement announcement on Wednesday the 16th. On Tuesday the 15th the Central Bank of Japan will be in the same position.

In the last several years, the stock market has been driven less on economic data and corporate earnings than on Central Bank policy, so the next week could possibly set the tone for the next several months.

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The S&P 500 (C-Fund) bounced back yesterday but created an "inside day" where the high and low of the day was inside the prior day's range. Trading volume was as light as it has been all of 2016. That tells me investors are on hold waiting for today's ECB decision on stimulus. It could be a market mover.

The small caps (Dow Completion Index / S-fund) traded in a very tight range making a modest 0.49% gain and hanging onto the lower end of its rising channel.

The price of oil helped stocks hold up yesterday as the 5.4% rally pushed it to new 2016 highs. It found support at the rising support line, but there is a little resistance holding here in the 38.0 - 38.5 area.

China's Shanghai is trading within the large bear flag and it looks a little vulnerable without some kind of break to the upside in the near future.

The Japanese Nikkei had a decent rally of its February lows but has since been pushed back by the 50-day EMA, and another possible lower high.

The 10-year Treasury yield rallied up to fill that small open gap near 1.9% but remains in a bear flag and below the 50-day EMA. That appears to be a bullish set up for bonds and the F-fund.

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

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