It was a directionless day Wednesday as the indices bounced back and forth between positive and negative territory, and with the pre-holiday volume being quite light, stocks were pushed around quite easily. The Fed Minutes were released at 2 PM ET yesterday and you can see in the Dow chart below that the reaction was a little more volatile than we're used to after those minutes. It was almost like an FOMC policy statement reaction. The Dow ended the day down 27-points.
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The indices and bonds were basically flat with only the C-fund closing with a small loss.
The SPY (S&P500 / C-fund) made a new intraday high thanks to the Fed Minutes which triggered a midday rally. Overall the day was flat to negative and that's not a terrible thing considering volume is light because of the holiday weekend coming up, and because of the cup and handle formation which would prefer to see a light volume pullback after a breakout. By the way, that's 5 closes above the breakout line, so this looks promising.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weaker seasonality this week compared to next (today is trading day # -2 on this chart) plays into the Cup and Handle formation. Maybe this is a little too cute for us to expect it to play out.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) was up slightly and is trying to reach toward those old highs. Perhaps money will flow into the small caps if the S&P 500 continues to digest the recent gains.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Transportation Index fell 2% yesterday as the airline stocks were down very sharply. I don't know if the price of oil has anything to do with it but the price of a barrel has gone from below $43 in March to over $62, and closed yesterday near $59.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) was up and seems to be consolidating recent gains.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The dollar was up slightly and the two big open gaps, one above the current level and one below, will have that magnetic attraction. My guess is that the pre-holiday reversal action will have it close the overhead gap first, test the 50-day EMA, then resume the downtrend next week. But my guesses are usually pretty good contrarian indicators so we'll see.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) rallied slightly on Wednesday, but the old support line held as resistance so far.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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