Stocks rallied on Thursday as the tax cuts moved a step closer. The Dow gained 332-points on the day, outperforming the S&P 500 and Nasdaq, although all of them had solid days. It was the biggest one-day gain for the Dow since March 1.[TABLE="align: center"]
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The market moved into a higher gear once it was announced that John McCain, one of the tax plan holdouts, was now onboard with the Senate plan. Later in the day however, there were some concerns about the estimated economic growth the tax cuts would generate. Some committee decided the growth would be much less than the Republicans have estimated, and that caused some indices to close off their highs and the futures to move lower after hours.
As good as it sounded for stocks, there was some underlying weaker action. Small caps (Russell 2000: +0.12%) didn't exactly surge along with the Dow, and surprisingly only 51% of stocks on the Nasdaq were positive despite a 50-point, or 0.73%, gain in the index. So the technology stocks are still under some pressure despite what the gains. That said it looks like more rotation rather than outright selling.
The NYSE saw a better ratio with 56% of stocks being positive, but still, on a day when the Dow is up over 300-points, we might expect more stocks moving up.
The SPY (S&P 500 / C-fund) blasted off to new highs and above some key resistance, but the close off the highs does give us some pause as we may have started to see some profit taking. Volume has been getting quite high so is there anyone out there left to buy? But clearly there was buying, even above resistance.
A longer-term chart shows the SPY is testing some long-term resistance right now, but it is rising. Does it matter in a market like this?
The DWCPF (small caps / S-fund) lagged the big gains of the Dow and there is some resistance that may be holding it back, but support is also rising.
The Dow Transportation Index has been the surprise this week, in a market that has been full of surprises. So much for any kind of double top pullback after Wednesday big rally as the Transports tacked on another 2% on Thursday. It did close off the highs so there seemed to be some profit taking, but this is a bullish sign for stocks in general.
The EAFE Index (I-fund) has stalled a bit lately as we're seeing some weakness in European markets. The London FTSE actually closed below its 200-day EMA yesterday.
The AGG (Bonds / F-fund) was down sharply for a second straight day. We're seeing a technical breakdown but one day does not make a confirmed breakdown. That said, we're all expecting yields to move up so that would mean lower bond prices.
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. Have a great weekend!
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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As good as it sounded for stocks, there was some underlying weaker action. Small caps (Russell 2000: +0.12%) didn't exactly surge along with the Dow, and surprisingly only 51% of stocks on the Nasdaq were positive despite a 50-point, or 0.73%, gain in the index. So the technology stocks are still under some pressure despite what the gains. That said it looks like more rotation rather than outright selling.
The NYSE saw a better ratio with 56% of stocks being positive, but still, on a day when the Dow is up over 300-points, we might expect more stocks moving up.
The SPY (S&P 500 / C-fund) blasted off to new highs and above some key resistance, but the close off the highs does give us some pause as we may have started to see some profit taking. Volume has been getting quite high so is there anyone out there left to buy? But clearly there was buying, even above resistance.
A longer-term chart shows the SPY is testing some long-term resistance right now, but it is rising. Does it matter in a market like this?
The DWCPF (small caps / S-fund) lagged the big gains of the Dow and there is some resistance that may be holding it back, but support is also rising.
The Dow Transportation Index has been the surprise this week, in a market that has been full of surprises. So much for any kind of double top pullback after Wednesday big rally as the Transports tacked on another 2% on Thursday. It did close off the highs so there seemed to be some profit taking, but this is a bullish sign for stocks in general.
The EAFE Index (I-fund) has stalled a bit lately as we're seeing some weakness in European markets. The London FTSE actually closed below its 200-day EMA yesterday.
The AGG (Bonds / F-fund) was down sharply for a second straight day. We're seeing a technical breakdown but one day does not make a confirmed breakdown. That said, we're all expecting yields to move up so that would mean lower bond prices.
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. Have a great weekend!
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.
