Stocks were mixed on Thursday, but mostly higher with the Transports and small caps outperforming, the S&P 500 adding 0.4%, and the Dow slipping 10-points. Boeing had more issues with their 737 jets and their losses yesterday cost the Dow about 70 points. Trading volume was very light as we head into the important G-20 and trade meetings.
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We're coming to the end of a great first half of the year for stocks and the action yesterday and today may have a lot to do with end of quarter window dressing from money managers who want to show in their quarterly reports that they are holding winners, so its a little tough to trust the action. I saw that a couple of big banks announced dividend increases and stock buybacks after the close yesterday, just in time for those quarterly reports.
The G-20 meetings are kicking off and President Trump will meet with Chinese President Xi Jinping on Saturday so there's a lot riding on the next few days, and the window dressing rally could be met with some profit taking to avoid volatility. To be honest, I don't know if the "Saturday" meeting means Saturday in Japan, which would be Friday here.
June didn't have the best historical record as far as seasonality goes, but with one trading day to go, it is obviously one of the best Junes that we've seen in decades. On the other hand July does have a bullish seasonal record, particularly in the first half of the month, but can it add onto the unusually strong gains that we saw in June?
Chart provided courtesy of www.sentimentrader.com
The action surrounding the 4th of July holiday is also very strong typically, with the trading day before the holiday being up about 65% of the time, which is not necessarily July 3rd every year because of weekends. July 3rd has actually been up 71% of the time in the last 30 years. The day after the 4th of July holiday (not always the 5th) is a little below a 50/50 proposition, but for several days after that the S&P 500 averages being up between 55% to 62% of the time. Of course that means they are down 38% to 45% of the time, and as I mentioned, we're coming off of some big gains in June and heading into trade talks.
So to tie these two together, the July seasonality could be moot if the news on the trade war front is bad this weekend, so it's tough to make any call today. Despite some selling in Apple and Nike after hours, I see the futures opened higher on Thursday evening . It may be part of the window dressing or investors / traders just trying to front run what they hope will be good news from that trade meeting over the weekend.
The S&P 500 (C-fund) was up nicely on Thursday, adding 0.38%. It's too early to say, but unless it can move meaningfully higher over the next few days, we could interpret this as a bear flag forming. I still think it may need to fill that open gap near 2900 before making new highs, and the trade negotiations over the weekend could either make that happen, or leave that open gap in the dust only to be a consideration down the road. Gaps do tend to get filled. The question with this one is whether it happens sooner, or later.
The DWCPF (S-fund) had a huge day jumping 1.46% and it broke back above that 50-day EMA with ease. Technically there are still some issues, but it may be trying to create a higher low here if it can make its way back near June's highs.
The Dow Transportation Index also had a big day but it closed off the morning highs after running into the 50 and 200-day EMAs. There's some resistance at those averages of course, and then the 10,500 area would be a make or break level for any further rebound.
The EFA (I-fund) was up slightly after filling one of its open gaps on Wednesday (blue). There are more gaps below and the battle between filling those gaps and making a new high again is on, and that may be determined after this weekend's G-20 meetings.
The Volatility Index has moved above the 200-day EMA for three straight days, but it has not been progressing much after it hits it. Will that be a roadblock or is volatility about to breakout again?
AGG (Bonds / F-fund) was up nicely with yields falling again and the rising trend refuses to break no matter how over-extended this chart gets.
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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We're coming to the end of a great first half of the year for stocks and the action yesterday and today may have a lot to do with end of quarter window dressing from money managers who want to show in their quarterly reports that they are holding winners, so its a little tough to trust the action. I saw that a couple of big banks announced dividend increases and stock buybacks after the close yesterday, just in time for those quarterly reports.
The G-20 meetings are kicking off and President Trump will meet with Chinese President Xi Jinping on Saturday so there's a lot riding on the next few days, and the window dressing rally could be met with some profit taking to avoid volatility. To be honest, I don't know if the "Saturday" meeting means Saturday in Japan, which would be Friday here.
June didn't have the best historical record as far as seasonality goes, but with one trading day to go, it is obviously one of the best Junes that we've seen in decades. On the other hand July does have a bullish seasonal record, particularly in the first half of the month, but can it add onto the unusually strong gains that we saw in June?
Chart provided courtesy of www.sentimentrader.com
The action surrounding the 4th of July holiday is also very strong typically, with the trading day before the holiday being up about 65% of the time, which is not necessarily July 3rd every year because of weekends. July 3rd has actually been up 71% of the time in the last 30 years. The day after the 4th of July holiday (not always the 5th) is a little below a 50/50 proposition, but for several days after that the S&P 500 averages being up between 55% to 62% of the time. Of course that means they are down 38% to 45% of the time, and as I mentioned, we're coming off of some big gains in June and heading into trade talks.
So to tie these two together, the July seasonality could be moot if the news on the trade war front is bad this weekend, so it's tough to make any call today. Despite some selling in Apple and Nike after hours, I see the futures opened higher on Thursday evening . It may be part of the window dressing or investors / traders just trying to front run what they hope will be good news from that trade meeting over the weekend.
The S&P 500 (C-fund) was up nicely on Thursday, adding 0.38%. It's too early to say, but unless it can move meaningfully higher over the next few days, we could interpret this as a bear flag forming. I still think it may need to fill that open gap near 2900 before making new highs, and the trade negotiations over the weekend could either make that happen, or leave that open gap in the dust only to be a consideration down the road. Gaps do tend to get filled. The question with this one is whether it happens sooner, or later.
The DWCPF (S-fund) had a huge day jumping 1.46% and it broke back above that 50-day EMA with ease. Technically there are still some issues, but it may be trying to create a higher low here if it can make its way back near June's highs.
The Dow Transportation Index also had a big day but it closed off the morning highs after running into the 50 and 200-day EMAs. There's some resistance at those averages of course, and then the 10,500 area would be a make or break level for any further rebound.
The EFA (I-fund) was up slightly after filling one of its open gaps on Wednesday (blue). There are more gaps below and the battle between filling those gaps and making a new high again is on, and that may be determined after this weekend's G-20 meetings.
The Volatility Index has moved above the 200-day EMA for three straight days, but it has not been progressing much after it hits it. Will that be a roadblock or is volatility about to breakout again?
AGG (Bonds / F-fund) was up nicely with yields falling again and the rising trend refuses to break no matter how over-extended this chart gets.
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.
