Just another Friday of stock market gains, so the pattern continues. Normally when you identify a pattern, it's just about run its course and close to ending. This Friday rally / early week weakness, has been going on fairly consistently all year. The Dow gained 110-points. Not a giant gain and it was about half the gain from the day's high, but my theory continues to be that investors (or somebody) are still loading up on Fridays in case there is some kind of trade deal made over the weekend.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TABLE="align: center"]
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="align: center"]
[/TD]
[/TR]
[/TABLE]
We talked about the start of a new month having a positive bias and can start with a bang. The opening bell did start with a bang, but we saw selling right at the open, but as has been the case, the dip buyers were there to push the indices higher into the close, giving the intraday charts that "V" pattern.
I keep saying that I would be surprised if the can rally can keep going - without some kind of backing and filling first - and almost day after day it has proven it can. We start this new week with the S&P 500 near the important 2800 area, and it's probably at this point that the index either explodes to the upside once that resistance gets taken out, or the resistance holds and we get a meaningful pullback. The small caps fund and the EAFE Index chart, or I-fund, have already moved above their upper resistance levels, so it's certainly not out of the question for S&P 500. But those two funds were hit much harder during the downturn so they had more to make up.
My personal feeling is this market is being kept afloat by the headlines or prospective headline (i.e. trade deal) but it will eventually bring another round of pain. However, momentum is a strong force and going against it can feel like trying to stop a moving freight train. Unfortunately, I have been trying to step in front of this train and I keep getting run over. But like January of 2018, when it does stop, the downside could be swift and months of gains can be wiped out in a matter of days, so be careful out there.
We get the February Jobs Report on Friday and estimates are looking for a gain of about 175,000 jobs, an unemployment rate of 3.8%, and wage growth of 0.3%.
The S&P 500 (C-fund) is at the very top of that range that we have watched for a long time. We saw resistance near 2600 break in mid-January, then 2700 toward the end of January, 2750 broke in February, and now in March it's pushing the boundaries just above that 2800 level that has failed a few times in the last year. Will we see a right shoulder of an inverted head and shoulders form, or do we simply breakout, which has been the pain trade for those who have not believed in this rally?
The weekly chart shows that 2800 area going back to the first rebound off the January / February 2018 lows. We saw one breakout above it, and one breakdown below the 2550 area, which has been the lower end of the range.
The DWCPF (S-fund) has been acting very well of late, but as I mentioned above, they were hit hard in 2018 (-9.26%) and had a lot of losses to make up.
The EFA (I-fund) is in the same boat. They lost 13.4% in 2018 so the bounce has been more pronounced.
The AGG (F-fund) dipped again on Friday, making it three days of declines in a row off the recent highs. There's decent support in the 106.50 area but there was a minor breakdown already when it fell below about 106.85.
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.
[TABLE="align: center"]
[TR]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"][/TD]
[/TR]
[/TABLE]
[/TD]
[TD]
[/TD]
[TD="align: center"]
[/TR]
[/TABLE]
We talked about the start of a new month having a positive bias and can start with a bang. The opening bell did start with a bang, but we saw selling right at the open, but as has been the case, the dip buyers were there to push the indices higher into the close, giving the intraday charts that "V" pattern.
I keep saying that I would be surprised if the can rally can keep going - without some kind of backing and filling first - and almost day after day it has proven it can. We start this new week with the S&P 500 near the important 2800 area, and it's probably at this point that the index either explodes to the upside once that resistance gets taken out, or the resistance holds and we get a meaningful pullback. The small caps fund and the EAFE Index chart, or I-fund, have already moved above their upper resistance levels, so it's certainly not out of the question for S&P 500. But those two funds were hit much harder during the downturn so they had more to make up.
My personal feeling is this market is being kept afloat by the headlines or prospective headline (i.e. trade deal) but it will eventually bring another round of pain. However, momentum is a strong force and going against it can feel like trying to stop a moving freight train. Unfortunately, I have been trying to step in front of this train and I keep getting run over. But like January of 2018, when it does stop, the downside could be swift and months of gains can be wiped out in a matter of days, so be careful out there.
We get the February Jobs Report on Friday and estimates are looking for a gain of about 175,000 jobs, an unemployment rate of 3.8%, and wage growth of 0.3%.
The S&P 500 (C-fund) is at the very top of that range that we have watched for a long time. We saw resistance near 2600 break in mid-January, then 2700 toward the end of January, 2750 broke in February, and now in March it's pushing the boundaries just above that 2800 level that has failed a few times in the last year. Will we see a right shoulder of an inverted head and shoulders form, or do we simply breakout, which has been the pain trade for those who have not believed in this rally?
The weekly chart shows that 2800 area going back to the first rebound off the January / February 2018 lows. We saw one breakout above it, and one breakdown below the 2550 area, which has been the lower end of the range.
The DWCPF (S-fund) has been acting very well of late, but as I mentioned above, they were hit hard in 2018 (-9.26%) and had a lot of losses to make up.
The EFA (I-fund) is in the same boat. They lost 13.4% in 2018 so the bounce has been more pronounced.
The AGG (F-fund) dipped again on Friday, making it three days of declines in a row off the recent highs. There's decent support in the 106.50 area but there was a minor breakdown already when it fell below about 106.85.
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.
