It was a mostly quiet day on Tuesday although we did see some wildly mixed action in a few of the major indices. The Dow was slightly lower most of the day and weak close left it down 24-points, while the S&P 500 closed slightly higher. The Nasdaq, small caps, and the I-fund all had strong days, but the Transportation Index was down sharply. Bonds were up.
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The SPY (S&P 500) stalled a bit yesterday but was able to close slightly higher. It would seem reasonable to assume that we could see a little pause after the powerful 8-day rally, and that could create a bullish inverted head and shoulders pattern. The idea of a pause here may actually be the obvious move but we know how the market likes to keep us off guard. The surprise here would be a breakout to new highs without a little pullback or consolidation first.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps of the Russell 2000 have been lagging but yesterday they played a little catch up leading the way with a 1% gain. It looks like it will be next to test the prior highs, but it has already come a long way in a short period of time.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq had another nice day and is leading the other indices to the upside having already made new highs last week.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow Transportation Index had a bad day. -1.1% isn't a terrible loss, but it's relative strength compared to the other indices is a little concerning for this market leader. It also produced a negative outside day. Looking for something positive, it did close off its lows after rebounding of off the 50-day EMA. The rising price of oil could be part of the cause, so oil and this index may be ones to watch for clues for the broader market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were up again and that support from the 200-day EMA continues to hold. If money is going into bonds, perhaps stocks will pause for a few days?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
For you market timers who look for the hot hand to follow, look no further than Intrepid Timer's service which is up over 7% through February 18. Compare that to the C-fund which is still down in 2014 at -0.12%.
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at TSP Talk Market Commentary
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