Stocks opened lower on Wednesday, and stay low as most of Tuesday's big gains were erased. The Dow lost 217 after gaining 222 on Tuesday. Disney was the big loser for the Dow, and after that, anything retail related got clobbered.
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So is the consumer losing steam, and is that an indication of a slowing economy? Possibly, but take a look at the chart of Amazon which is making new all-time highs. Perhaps the consumer is just sitting home buying rather than hitting the malls. By the way, Mall REIT stocks are also struggling.
Oil didn't show any signs of weakness yesterday, but it was a much lower than expected inventory report that sent the black gold rallying. So a low supply helped, rather than any signs of a pick up in demand - unless you want to speculate that inventories are low because consumers are buying more gasoline.
The S&P 500 (C-Fund) gave back almost all of Tuesday's gains after running into the descending resistance line off the April highs. This type of resistance doesn't usually cause too much of a problem, but if you remember the chart I posted yesterday, not being able to breakout above that resistance could be a major red flag. The 50-day EMA really needs to hold.
The DWCPF (S-fund) lost almost all of Tuesday gains but remains above the key 50 and 200-day EMAs. The decline yesterday was not the playbook for what looked like was going to be a small "V" bottom at the 50-day EMA. It's still technically OK, but that reversal of fortune didn't look very good.
The Dow Transportation Index found support last week at the April lows, then rallied back above the 50 and 200-day EMAs, but the 20-day EMA got it this time and here it is back below all three moving averages. Not the best setup going forward.
The Japanese Nikkei was up very slightly on Wednesday but closed well off the highs. It filled that open gap but has since pullback into the gap. The longer term trend is up off the February lows, but the angle of incline makes it look more like a bearish flag. Watch for any signs of a trend reversal, as in a lower low.
London's FTSE has been trading below the 200-day EMA all month and perhaps it is just "Brexit" concerns - the vote whether Britain will leave the Euro Zone. That vote comes in June. Whatever it is, the chart is suffering.
The AGG (Bonds / F-fund) was basically flat yesterday but closed well off the high producing a possible negative reversal day. It is right in the middle of a large rising trading channel so there is wiggle room on both sides.
Admin Note: If anyone is interested in a free Players Championship Golf Tournament Pool, go here for more information: http://www.tsptalk.com/mb/site-news-and-announcements/25150-players-golf-contest-2016-a.html.html
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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The retail stocks have been getting hit hard recently and are sitting at kind of an important level - the 2015 lows. It's possible that this is a big inverted head and shoulders bottoming pattern, but it probably can't go too much lower from here to keep that intact.
So is the consumer losing steam, and is that an indication of a slowing economy? Possibly, but take a look at the chart of Amazon which is making new all-time highs. Perhaps the consumer is just sitting home buying rather than hitting the malls. By the way, Mall REIT stocks are also struggling.
Oil didn't show any signs of weakness yesterday, but it was a much lower than expected inventory report that sent the black gold rallying. So a low supply helped, rather than any signs of a pick up in demand - unless you want to speculate that inventories are low because consumers are buying more gasoline.
The S&P 500 (C-Fund) gave back almost all of Tuesday's gains after running into the descending resistance line off the April highs. This type of resistance doesn't usually cause too much of a problem, but if you remember the chart I posted yesterday, not being able to breakout above that resistance could be a major red flag. The 50-day EMA really needs to hold.
The DWCPF (S-fund) lost almost all of Tuesday gains but remains above the key 50 and 200-day EMAs. The decline yesterday was not the playbook for what looked like was going to be a small "V" bottom at the 50-day EMA. It's still technically OK, but that reversal of fortune didn't look very good.
The Dow Transportation Index found support last week at the April lows, then rallied back above the 50 and 200-day EMAs, but the 20-day EMA got it this time and here it is back below all three moving averages. Not the best setup going forward.
The Japanese Nikkei was up very slightly on Wednesday but closed well off the highs. It filled that open gap but has since pullback into the gap. The longer term trend is up off the February lows, but the angle of incline makes it look more like a bearish flag. Watch for any signs of a trend reversal, as in a lower low.
London's FTSE has been trading below the 200-day EMA all month and perhaps it is just "Brexit" concerns - the vote whether Britain will leave the Euro Zone. That vote comes in June. Whatever it is, the chart is suffering.
The AGG (Bonds / F-fund) was basically flat yesterday but closed well off the high producing a possible negative reversal day. It is right in the middle of a large rising trading channel so there is wiggle room on both sides.
Admin Note: If anyone is interested in a free Players Championship Golf Tournament Pool, go here for more information: http://www.tsptalk.com/mb/site-news-and-announcements/25150-players-golf-contest-2016-a.html.html
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.
