Stocks opened sharply lower yesterday on more Trade War concerns as China is starting to push back. The Dow was down 500-points at the lows, but investors ended up being unfazed and turned the big loss into a lofty gain. The Dow closed up 231-point or nearly after trading in a nearly 800-point range on the day.
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Last year it was the tax cuts where stocks rallied on the rumor, rallied on the news, and rallied on any mention of them. Now we have the tariff / trade war and it may be repeating -- in reverse.
We got a 10% correction in February in part due to the announcement of the tariffs, so we sold off on that rumor, and now the news in unfolding and as expected, China and others want to push back, so we may be in a period of continued volatility where we react to each headline like we saw with the rallies over the tax cuts. Technically, that has led to a test of the lows, so far.
The short-term action looks positive with the huge positive reversal yesterday, but don't get too comfortable. The market is in a different place than it was in 2017 and volatility is still elevated, and the next negative headline could be hiding around the corner. Be careful.
We get the March Jobs Report on Friday and estimates are looking for a gain of 175,000 jobs and an unemployment rate of 4.0%. This could be a market mover and wage growth may be the key. Too much growth may panic the bond market again.
Admin Note: If anyone is interested in our free annual Master's Golf Tournament Pool, please click here for more info. It start early Thursday so the deadline is imminent.
The S&P 500 / C-fund posted a big day yesterday and the big reversal is a good sign, but technically there are still concerns here. You can see the falling wedge in blue is being tested now. A break above that line would be a big plus and could mean a trip up to test the 50-day EMA again, but it has to break above that wedge first.
The small caps / S-fund poked its head above its descending resistance line but being a lightly followed index, the trendlines are not quite as firm. The 50-day EMA is just 1% overhead and that will be an interesting test if it gets there.
The Dow Transportation Index had a big day reversal day but could not make it into positive territory, and as you can see, nothing has really changed. It's in a big bear flag but it has still managed to hold above the 200-day EMA this whole time.
The EAFE Index / I-fund is still flirting near the lows and the 200-day EMA. It's hard to say what's happening here since U.S. stocks soared after the overseas markets closed so they may be poised for a sympathy rally to catch up.
The High Yield Corporate Bond Fund pushed up to the 50-day EMA and the top of the large bull flag, after breaking above the smaller bull fag. This looks like a bullish set up, but it depends how firm the resistance will be.
The AGG (bonds / F-fund) was up slightly as it continues to try to hold above the old resistance of the bear flag and above the 50-day EMA.
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. We'll see you back here tomorrow.
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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[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="align: center"]
[/TR]
[/TABLE]
Last year it was the tax cuts where stocks rallied on the rumor, rallied on the news, and rallied on any mention of them. Now we have the tariff / trade war and it may be repeating -- in reverse.
We got a 10% correction in February in part due to the announcement of the tariffs, so we sold off on that rumor, and now the news in unfolding and as expected, China and others want to push back, so we may be in a period of continued volatility where we react to each headline like we saw with the rallies over the tax cuts. Technically, that has led to a test of the lows, so far.
The short-term action looks positive with the huge positive reversal yesterday, but don't get too comfortable. The market is in a different place than it was in 2017 and volatility is still elevated, and the next negative headline could be hiding around the corner. Be careful.
We get the March Jobs Report on Friday and estimates are looking for a gain of 175,000 jobs and an unemployment rate of 4.0%. This could be a market mover and wage growth may be the key. Too much growth may panic the bond market again.
Admin Note: If anyone is interested in our free annual Master's Golf Tournament Pool, please click here for more info. It start early Thursday so the deadline is imminent.
The S&P 500 / C-fund posted a big day yesterday and the big reversal is a good sign, but technically there are still concerns here. You can see the falling wedge in blue is being tested now. A break above that line would be a big plus and could mean a trip up to test the 50-day EMA again, but it has to break above that wedge first.
The small caps / S-fund poked its head above its descending resistance line but being a lightly followed index, the trendlines are not quite as firm. The 50-day EMA is just 1% overhead and that will be an interesting test if it gets there.
The Dow Transportation Index had a big day reversal day but could not make it into positive territory, and as you can see, nothing has really changed. It's in a big bear flag but it has still managed to hold above the 200-day EMA this whole time.
The EAFE Index / I-fund is still flirting near the lows and the 200-day EMA. It's hard to say what's happening here since U.S. stocks soared after the overseas markets closed so they may be poised for a sympathy rally to catch up.
The High Yield Corporate Bond Fund pushed up to the 50-day EMA and the top of the large bull flag, after breaking above the smaller bull fag. This looks like a bullish set up, but it depends how firm the resistance will be.
The AGG (bonds / F-fund) was up slightly as it continues to try to hold above the old resistance of the bear flag and above the 50-day EMA.
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. We'll see you back here tomorrow.
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.
