Stocks traded in a fairly light trading range to close out February, a month that outperformed most expectations, and its weak seasonal history. The Dow lost 69-points and we saw modest 0.3% losses in many indices. Bonds were down and yields moved higher after a stronger than expected GDP number, +2.6%. Estimates were looking for 2.3%.
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The momentum has slowed recently but we haven't really seen any kind of rollover so it could just be some consolidation before another attempt to move higher. The problem is, as you'll see in the charts below, that the charts are at critical points testing the high end of the resistance levels off the lows.
New months can start with a bang. The question, which direction will the start of March's bang be? March has a good seasonal record as we showed yesterday, and the start of new months tend to have a positive bias, but we have also seen rallies end when a new months starts (or right after one or two days of seasonal strength) so it's anyone's guess at this point. There are good arguments on both sides.
The S&P 500 (C-fund) was down on Friday but it was an inside day with the high being lower than Wednesday's high, and the low being higher than Wednesday's low. You can see the overhead resistance in the 2800 area, but there's also rising support. I still think we could see a pullback to fill in a right shoulder of an inverted head and shoulders pattern, but any bearishness has been punished this year so my conviction isn't all that strong.
This longer-term chart shows us that, if this market is topping out, it may be close to a peak on this leg up now, but of course that doesn't mean it is topping out. Like the chart above, we see the resistance lines and those are the lines in the sand, with 2800 being one of the last lines in the sand that I expected to be hit, and it has run much further then I expected so perhaps it can keep going. I don't know, but I probably won't be a true believer until it does move closer to 2850, and even reach toward new highs as an extreme.
The DWCPF (S-fund) was down modestly yesterday, but this small break is certainly deserving after the recent run. One of our forum members, Robvegas, pointed out to me yesterday how the 10-day average has been holding the small caps' rally up since it held on that Apple earnings warning sell-off back on January 3rd. Here it is testing that 10 day average again.
The EFA (I-fund) was down slightly on the day and the dollar was up slightly. The channel is rising and above key support, but it is dipping a bit here and we'll have to see where buyers come back in.
The AGG (F-fund) fell yesterday after the stronger than expected GDP report. I actually would have expected bonds to move lower on that 2.6% number, so it doesn't look like the bond market is overly concerned about that higher growth. But it did react.
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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[TD="align: center"] Daily TSP Funds Return
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[TD="align: right"][/TD]
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[TD="align: center"]
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The momentum has slowed recently but we haven't really seen any kind of rollover so it could just be some consolidation before another attempt to move higher. The problem is, as you'll see in the charts below, that the charts are at critical points testing the high end of the resistance levels off the lows.
New months can start with a bang. The question, which direction will the start of March's bang be? March has a good seasonal record as we showed yesterday, and the start of new months tend to have a positive bias, but we have also seen rallies end when a new months starts (or right after one or two days of seasonal strength) so it's anyone's guess at this point. There are good arguments on both sides.
The S&P 500 (C-fund) was down on Friday but it was an inside day with the high being lower than Wednesday's high, and the low being higher than Wednesday's low. You can see the overhead resistance in the 2800 area, but there's also rising support. I still think we could see a pullback to fill in a right shoulder of an inverted head and shoulders pattern, but any bearishness has been punished this year so my conviction isn't all that strong.
This longer-term chart shows us that, if this market is topping out, it may be close to a peak on this leg up now, but of course that doesn't mean it is topping out. Like the chart above, we see the resistance lines and those are the lines in the sand, with 2800 being one of the last lines in the sand that I expected to be hit, and it has run much further then I expected so perhaps it can keep going. I don't know, but I probably won't be a true believer until it does move closer to 2850, and even reach toward new highs as an extreme.
The DWCPF (S-fund) was down modestly yesterday, but this small break is certainly deserving after the recent run. One of our forum members, Robvegas, pointed out to me yesterday how the 10-day average has been holding the small caps' rally up since it held on that Apple earnings warning sell-off back on January 3rd. Here it is testing that 10 day average again.
The EFA (I-fund) was down slightly on the day and the dollar was up slightly. The channel is rising and above key support, but it is dipping a bit here and we'll have to see where buyers come back in.
The AGG (F-fund) fell yesterday after the stronger than expected GDP report. I actually would have expected bonds to move lower on that 2.6% number, so it doesn't look like the bond market is overly concerned about that higher growth. But it did react.
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.
