Well, the Rate Hike Rally was good while it lasted, which was less than 24 hours. Stocks opened higher, but once again the falling price of oil took center sage and investors didn't feel much like holding onto stocks. The Dow ended the day at the lows losing 252-points.
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The dollar rallied strongly helping push the price of oil down, and it usually negatively impacts our I-fund, but because the losses doubled late in trading yesterday, the overseas markets didn't get a chance to react yet.
We have talked about what happens after a big emotional move in stocks after a jobs report or an FOMC meeting, and it's not a surprise that the gains were eaten into, but this one took all of those gains. Now we head into the strongest seasonal week of the year and the question is, who will take charge - the bulls or the bears?
So what happens after a +1% FOMC day followed by a -1% day?
The SPY (S&P 500 / C-Fund) gave back all of Wednesday's gains on Thursday, putting the bottoming formation in jeopardy. The last 20 minutes of trading looked a little panicky and how we interpret that may depend on how we open up on Friday. It seemed a little over done but if it continues, perhaps investors are going to be Scrooges this year. But with the year being a weak one, we should see an attempt at some positive window dressing to end the year to make money manger's reports look more attractive. Traders and bears tend to hibernate a little more this time of year.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
As I mentioned Thursday, new highs are imperative for this market or else another lower high could be the death of the bull market. This chart makes me a little more optimistic about the intermediate-term although in the short-term it could still bounce around within that bull flag. Bull flags tend to break to the upside.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) closed right at Tuesday's high and Wednesday's low. Interesting. It's as if it was trying to fill an open gap, but there was none.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index did make an negative outside reversal day, and I don't know if was emotion or just outright distain for the transportation stocks. With oil so low, you would think they would be a very happy sector, and that's what makes this so disturbing.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil was down again and the prior low is now acting as resistance while it creates a bear flag. Everything about this looks bearish. Is it too good to be true for the oil bears? Perhaps a capitulation low is not far off. I can see a big relief rally here because there are a lot of short positions out there that will get beaten up if we see a rally, and that will fuel more buying - pardon the pun.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-Fund) did the same move as the S-fund above, and this one did have a gap that needed filled. It just didn't get that far down. I don't think these positive reversals are dead yet, but more weakness today, below the gap, could be a deal breaker.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) was up on the weakness in stocks, but look at the bear flag forming.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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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The dollar rallied strongly helping push the price of oil down, and it usually negatively impacts our I-fund, but because the losses doubled late in trading yesterday, the overseas markets didn't get a chance to react yet.
We have talked about what happens after a big emotional move in stocks after a jobs report or an FOMC meeting, and it's not a surprise that the gains were eaten into, but this one took all of those gains. Now we head into the strongest seasonal week of the year and the question is, who will take charge - the bulls or the bears?
So what happens after a +1% FOMC day followed by a -1% day?
The SPY (S&P 500 / C-Fund) gave back all of Wednesday's gains on Thursday, putting the bottoming formation in jeopardy. The last 20 minutes of trading looked a little panicky and how we interpret that may depend on how we open up on Friday. It seemed a little over done but if it continues, perhaps investors are going to be Scrooges this year. But with the year being a weak one, we should see an attempt at some positive window dressing to end the year to make money manger's reports look more attractive. Traders and bears tend to hibernate a little more this time of year.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
As I mentioned Thursday, new highs are imperative for this market or else another lower high could be the death of the bull market. This chart makes me a little more optimistic about the intermediate-term although in the short-term it could still bounce around within that bull flag. Bull flags tend to break to the upside.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (small caps / S-Fund) closed right at Tuesday's high and Wednesday's low. Interesting. It's as if it was trying to fill an open gap, but there was none.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index did make an negative outside reversal day, and I don't know if was emotion or just outright distain for the transportation stocks. With oil so low, you would think they would be a very happy sector, and that's what makes this so disturbing.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The price of oil was down again and the prior low is now acting as resistance while it creates a bear flag. Everything about this looks bearish. Is it too good to be true for the oil bears? Perhaps a capitulation low is not far off. I can see a big relief rally here because there are a lot of short positions out there that will get beaten up if we see a rally, and that will fuel more buying - pardon the pun.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-Fund) did the same move as the S-fund above, and this one did have a gap that needed filled. It just didn't get that far down. I don't think these positive reversals are dead yet, but more weakness today, below the gap, could be a deal breaker.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-Fund) was up on the weakness in stocks, but look at the bear flag forming.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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.
