Stocks bounced above and below the break-even mark a few times yesterday before some late weakness took most indices into the red for the day. The Dow lost 27-points, while the TSP stock funds were mixed.
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Small caps were flat and the I-fund benefitted from early U.S. stock market strength and some weakness in the dollar, which is looking a little bearish.
A day after I said I was confused about what bonds wanted to do, but said if I had to guess which way they'd break - I'd say down... well, they continue to baffle me as they had a nice positive day yesterday.
The SPY (S&P 500) is still struggling to close above the December and January highs, but it does remain in a formation that we saw a lot of in 2013. It is a narrow rising trading channel and obviously either the resistance from the old highs or the support from the rising trading channel is going to have to give soon.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Russell 2000 closed slightly higher but since our S-fund small cap fund is not tracking the Russell 2000, but rather small and mid-caps, it did not close higher. But considering the sharp angle of the recent rally, just not falling seems to be a victory. The January highs are currently in the way and that is the current test for the small caps.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The I-fund was up yesterday and some weakness in the dollar gave it some help. You can see this dollar ETF - the UUP - is back testing the lower end of its trading range between 21.24 and 21.85, and the current push lower could be the start of a "W" pattern bottom, but these type of "h" formations (lower case H) are not generally bullish. If the dollar breaks down, look for the I-fund to outperform the C and S funds.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The last week in February has a choppy and underperforming seasonal bias, and that seems to be what we've gotten the last few days. There is no trading day #20 in February this year. You'll have to wait for the next Leap Year for that.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
March starts very strongly historically, and the first 2+ weeks have a bullish bias, but the latter half of the month is much less positive historically.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Bonds rallied yesterday pushing both the TLT and IEF above their 200-day EMAs. The breakout from the descending resistance line on the TLT looks positive, but I'm in sit-back-and-wait mode on bonds until they find direction.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Those pennant formation can produce fake-outs in one direction before settling back in the other direction, so I'd like to see 3 closes above or below a breakout level before getting more comfortable.
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Thanks for reading! We'll see you tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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