Stocks were mostly higher to end the 2nd quarter, although some very late selling, probably trading programs, took the indices from lofty gains to modest gain, and in the case of the Nasdaq, losses. The Dow was up over 120-points with less than 1/2 hour left in the day and those gains were cut in half.
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Stocks ended the week with slight to modest losses and the TSP funds ended June with mixed results as the S-fund and C-funds saw gains for the month while the I-fund and bonds saw small losses.
One of the keys to the recent weakness has been the Fed's shift to a more hawkish outlook making the easy money, which the market has been feeding off of that for years, less easy. Like the taper tantrum the market had a couple of years ago, will the bears use it as fuel to finally apply some pressure?
We get the June Jobs Report on Friday and estimates are looking for a gain of 173,000 jobs for the month, and an unemployment rate of 4.3%.
Depending on the action during the half trading day on Monday, this commentary may be left up for Wednesday morning. If there's any major movement or development we'll be back to address it, otherwise expect either a very quick update on Wednesday, or just a confirmation of the analysis below.
The SPY (S&P 500 / C-fund) had a test of the 50-day EMA on Thursday that held perfectly. If you look at the other tests it would make you think that this is just another buying opportunity, and it might be.
After all, the 50-day EMA has held every time since the election.
I think what is different this time is the relative weakness in the stocks that led the market higher for the last several months, the Nasdaq 100. Take a look at the chart. The 50-day EMA was broken last week, as was the rising support line going back to early December. It doesn't necessarily mean the bull market is in jeopardy, but it is a pretty good warning sign.
The DWCPF (S-fund) has really been holding up well and is either ready to break out to new highs, or that 1235 area is going to continue to hold as resistance. The battle is going to be between that resistance and the rising support line coming off the May low.
The Dow Transportation Index is also performing well, but it is nearing its February high and that could set off a double top pullback. It could also breakout to new highs, but it has come a long way in the last few weeks and may need a little more consolidation before that happens.
The EFA (EAFE Index / I-fund) was down last week and for the month of June and a lot of that has to do with the recent struggle that the London FTSE Index is having. It's actually down to the bottom of a parallel trading channel so perhaps it at it lows for this pullback, but if that breaks... The FTSE is the largest holding in the I-fund.
The High Yield Corporate Bond Fund continues to rebound from its recent pullback to the 50-day EMA. That could be a bear flag forming and those open gaps are now both filled, well almost. And now we'll see if the top of that second gap will now act as resistance, as is often the case.
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. Happy Independence Day, everyone!
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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Stocks ended the week with slight to modest losses and the TSP funds ended June with mixed results as the S-fund and C-funds saw gains for the month while the I-fund and bonds saw small losses.
One of the keys to the recent weakness has been the Fed's shift to a more hawkish outlook making the easy money, which the market has been feeding off of that for years, less easy. Like the taper tantrum the market had a couple of years ago, will the bears use it as fuel to finally apply some pressure?
We get the June Jobs Report on Friday and estimates are looking for a gain of 173,000 jobs for the month, and an unemployment rate of 4.3%.
Depending on the action during the half trading day on Monday, this commentary may be left up for Wednesday morning. If there's any major movement or development we'll be back to address it, otherwise expect either a very quick update on Wednesday, or just a confirmation of the analysis below.
The SPY (S&P 500 / C-fund) had a test of the 50-day EMA on Thursday that held perfectly. If you look at the other tests it would make you think that this is just another buying opportunity, and it might be.
After all, the 50-day EMA has held every time since the election.
I think what is different this time is the relative weakness in the stocks that led the market higher for the last several months, the Nasdaq 100. Take a look at the chart. The 50-day EMA was broken last week, as was the rising support line going back to early December. It doesn't necessarily mean the bull market is in jeopardy, but it is a pretty good warning sign.
The DWCPF (S-fund) has really been holding up well and is either ready to break out to new highs, or that 1235 area is going to continue to hold as resistance. The battle is going to be between that resistance and the rising support line coming off the May low.
The Dow Transportation Index is also performing well, but it is nearing its February high and that could set off a double top pullback. It could also breakout to new highs, but it has come a long way in the last few weeks and may need a little more consolidation before that happens.
The EFA (EAFE Index / I-fund) was down last week and for the month of June and a lot of that has to do with the recent struggle that the London FTSE Index is having. It's actually down to the bottom of a parallel trading channel so perhaps it at it lows for this pullback, but if that breaks... The FTSE is the largest holding in the I-fund.
The High Yield Corporate Bond Fund continues to rebound from its recent pullback to the 50-day EMA. That could be a bear flag forming and those open gaps are now both filled, well almost. And now we'll see if the top of that second gap will now act as resistance, as is often the case.
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. Happy Independence Day, everyone!
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.
