Stocks rallied yesterday, and why not? It was Tuesday and we've now had 7 consecutive positive Tuesdays. Monday's positive reversal day followed through as we suspected, but today we get the FOMC policy statement and the market will brace for any surprises. The Dow gained 87-points and most major indices gained about a half of one percent.
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The recent pattern for stocks has been some strength early in the week, obviously on Tuesdays as we mentioned, but weakness has been kicking in on Thursdays and into Friday as investors get concerned about holding over the weekend because of the possibility of tensions escalating in the Ukraine. This week could be different as we get the FOMC policy statement this afternoon, and then on Friday we get the April jobs report. Both could be market movers but if they contribute to a rally, we'd have to wonder if profit taking will kick in on Friday afternoon.
The SPY (S&P 500 / C-fund) was up on typical post positive reversal day action. Volume was light, but that could be tentativeness in front of today's Fed meeting. Looking at the chart, it is easy to be optimistic. Too bad many of the other charts don't look quite as bullish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq is trying, but it is still struggling in a short-term downtrend, and the 50-day EMA acted as resistance on the recent rebound. This isn't what a bullish chart would do. It did reverse back up possibly creating a higher low, so that's a start, but the 50-day EMA and overhead resistance line must be broken before this chart can be considered bullish. If those areas of resistance are broken, we could see a sharp rally as investors are likely to jump back in at that point.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index has been one of the better performing indexes, which is what you want to see from one of the market leaders. It remains above some key support levels after possibly creating a higher low. It has now had two positive reversal days in a row, which has worked out well for this index this year.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The TLT bond fund is in a rising wedge pattern and it is now trying to hold at the 20-day EMA. Short-term this doesn't look bad, but if the wedge breaks down we could easily see this test the 200-day EMA again.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The yield on the 10-year Treasury has successfully held above the 200-day EMA once again, but it is also having a difficult time getting back above the 50-day EMA. The chart above, which represent bond prices, and this chart of the yield below, are giving some conflicting signals for bonds, which makes it tough to analyze what to do with the F-fund. I'm still neutral on bonds.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The April jobs report is due out on Friday. Estimates are looking for a gain of 210,000 jobs, with an unemployment rate of 6.6%. We have our monthly jobs report contest going on right now in the forum. More info: Guess the Jobs Report Contest for April
Read more in today's TSP Talk Plus Report. We post more charts and indicators, plus discuss the Sentiment Survey Results and its 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! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
[TABLE="width: 79%, align: center"]
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[TD="width: 300"]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
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[/TR]
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The recent pattern for stocks has been some strength early in the week, obviously on Tuesdays as we mentioned, but weakness has been kicking in on Thursdays and into Friday as investors get concerned about holding over the weekend because of the possibility of tensions escalating in the Ukraine. This week could be different as we get the FOMC policy statement this afternoon, and then on Friday we get the April jobs report. Both could be market movers but if they contribute to a rally, we'd have to wonder if profit taking will kick in on Friday afternoon.
The SPY (S&P 500 / C-fund) was up on typical post positive reversal day action. Volume was light, but that could be tentativeness in front of today's Fed meeting. Looking at the chart, it is easy to be optimistic. Too bad many of the other charts don't look quite as bullish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq is trying, but it is still struggling in a short-term downtrend, and the 50-day EMA acted as resistance on the recent rebound. This isn't what a bullish chart would do. It did reverse back up possibly creating a higher low, so that's a start, but the 50-day EMA and overhead resistance line must be broken before this chart can be considered bullish. If those areas of resistance are broken, we could see a sharp rally as investors are likely to jump back in at that point.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index has been one of the better performing indexes, which is what you want to see from one of the market leaders. It remains above some key support levels after possibly creating a higher low. It has now had two positive reversal days in a row, which has worked out well for this index this year.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The TLT bond fund is in a rising wedge pattern and it is now trying to hold at the 20-day EMA. Short-term this doesn't look bad, but if the wedge breaks down we could easily see this test the 200-day EMA again.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The yield on the 10-year Treasury has successfully held above the 200-day EMA once again, but it is also having a difficult time getting back above the 50-day EMA. The chart above, which represent bond prices, and this chart of the yield below, are giving some conflicting signals for bonds, which makes it tough to analyze what to do with the F-fund. I'm still neutral on bonds.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The April jobs report is due out on Friday. Estimates are looking for a gain of 210,000 jobs, with an unemployment rate of 6.6%. We have our monthly jobs report contest going on right now in the forum. More info: Guess the Jobs Report Contest for April
Read more in today's TSP Talk Plus Report. We post more charts and indicators, plus discuss the Sentiment Survey Results and its 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! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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.
