Stocks played a little tug-of-war on Friday but the bulls came out on top with the indices closing strongly into the long holiday weekend. All eyes are on the price of oil, which was up on Friday, and Greece as they continue to negotiate their debt situation. The Dow gained 47-points but the broader indices saw even better results percentage-wise, and we saw new all-time highs in some.
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The I-fund led the way with a 0.92% gain, while small caps outperformed the S&P 500. Bonds were down.
Over the weekend negotiations broke down between Greece and euro zone finance ministers and the resolution is far from clear so we can probably expect more headlines driven market moves, and the futures were down modestly on that news.
The new highs last week could be an invitation for some profit taking in the wake of Greece's uncertainty, but the action has been bullish and the dip buyers may be waiting in the wings.
The S&P 500 (C-fund) pushed to new highs on Friday after a nearly 3-month sideways consolidation period. We saw a failed breakout here on the S&P back in December, and a few more along the way in the small caps' charts so we're a little leery about the prospects of this one, but if you compare this breakout with the one in October, the similarities might indicate a potential lower volatility incline higher for a few weeks after a few days of back and forth digestion.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart of the S&P 500 doesn't show any signs of trouble after it dodged that short-lived breakdown scare a few weeks ago.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) is in new high territory with some possible overhead resistance, but that resistance is rising.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Nasdaq 100 (QQQ) also posted new highs after breaking above multiple resistance levels last week, but there is an open gap that may look to get filled, and that would take it back below the recent breakout level. Negative news out of Europe could help fill those gaps but that old resistance line, currently near 104, could become support on any pullback.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
EFA (EAFE Index / I-fund) has been acting very strong in 2015 and we saw 2 bull flag breakouts in February. Now it has had two closes above the important 200-day EMA. On the negative side, those two open gaps will likely get filled at some point, sooner or later. There's some resistance at the November high near 64.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Oil has been holding up rather well considering the bear market that it has been in. We see a possible bull flag forming, but in a bear market, bull flags can't always be trusted.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
A lot of analysts have predicted that the recent rally in oil is just a temporary rebound in a bear market, and so far that is true, but this chart from Chartofthday.com shows that, inflation adjusted, the price of gasoline may have just hit a long-term support line. If that's the case, it's a good sign for the price of oil and as we've seen the stock market likes oil to remain above $50. But it's not great news for consumers who have had a few extra bucks in their pockets because of the decline in gasoline prices. And unfortunately for us consumers, the last few times that support line was hit, the price of gas reversed and spiked back up.
The AGG (Bonds / F-fund) was down on Friday and the 50-day EMA continues to hang on as support during this recent pullback. Should the 50-day EMA break, the next level of support would be in the 110 area.
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
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