Stocks rallied sharply on Friday morning, but had a difficult time holding onto those gains. The 150-point gain in the Dow turned into a 3-point gain during late afternoon trading, before buyers stepped up again and the Dow closed at +59-points.
[TABLE="width: 79%, align: center"]
[TR]
[TD="width: 300"]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S-fund gave up a large early gain to close with a modest 0.33% gain, but the Russell 200 actually closed in negative territory. Investors are still profit taking before the weekend as the situation in the Ukraine seems to be getting more volatile and the concern is waking up Monday morning after a major geopolitical event. I heard one analyst say the Dow could easily drop 1000 to 2000 points if the U.S. and Europe agree to make a push against the Russian Ruble.
It may turn out to be a pattern that lasts as long as there is conflict in the Ukraine. That is, selling on Friday afternoon with Monday's open being directly influenced by whether or not there was any geopolitical news over the weekend. So far nothing to serious has ignited and Russia's Putin actually called President Obama on Friday. That may explain why the Dow futures are opening up about 50-points higher as I write this Sunday evening.
The SPY (S&P 500 / C-fund) did not close strongly but it managed to close above the 20-day EMA again, and remain above the key support levels we have been watching (near 183).
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq 100 chart is breaking down but perhaps this falling wedge will do what falling wedges do, which is break to the upside. That's what it will take to get it back above the important 50-day EMA.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps are in the same boat and the reversal day on Friday didn't help, but like we mentioned above, the weak closes on Friday could be emotional in nature and emotional trading is not usually a good indication of what's going to happen next. Emotional trading is usually wrong.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
I have a hard time analyzing the technical action of the dollar because it often reacts counter to normal technical setups. That said, this chart looks very bullish to me for the short-term. It looks like a classic flag formation just before it breaks to the upside. There is still a large open gap on the UUP chart and that looks like a possible target if it does breakout. The turning point was the day of the FOMC meeting a couple of weeks ago.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds continue to consolidate and until the IEF breaks out of this trading range, I am going to avoid the F-fund.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This week we get the March jobs report and 1st quarter earnings season is not far off. That should be enough of a catalyst for the market, but I'm afraid Russia could put a wet blanket on the market regardless of the economic data.
Read more in today's TSP Talk Plus Report. We post more charts and indicators, plus discuss the Sentiment Survey Results and its 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 TSP Talk Market Commentary
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.
