Stocks and bonds were up on Friday, and every TSP fund was in the green. The seasonality chart for the month of May is not one of the better ones during the year, but here we are with one week to go in the month, and every fund was up last week, every fund is up for the month of May, and every fund is now up for 2014.
Small caps led the way on Friday, and the Dow gained 63-points. The S&P 500 closed at a new all-time high, but volume was very light and very few stocks in the S&P 500 made a new high, which may be a problem.
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Pre-holiday action has a tendency to go against the larger trend, and often after the holiday the bigger trend continues. That is a concern because of the strength late last week, particularly with how light the volume was leading into the weekend. The Memorial Day chart suggests that today could be the day for some give backs, but then historically the week isn't bad at all. We'll have to see how that plays out this time, and of course seasonality isn't the only factor.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
Looking just at the chart, the SPY (S&P 500 / C-fund) appears very promising. It shows a bullish PMO indicator crossover, new highs and the EMA's all pointing in the right direction. When the charts say one thing, and the indicators are saying something else, I usually choose the charts, but certainly there are caution flags waiving and the charts can turn quickly.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
This Nasdaq 100 (QQQ) chart is one of the more positive developments that I am seeing, as we need the tech stocks to get moving if the S&P 500 is going to keep moving higher and confirm its breakout. My big concern is if the breakout last week was just a light volume, pre-holiday fake-out that is trying to drag in more money before failing?
Chart provided courtesy of of www.decisionpoint.com, analysis by TSP Talk
The Russell 2000 performed well late last week, but is still clearly in a downtrend and looks more like a good selling opportunity than anything. If it can do what the QQQ has done above, then we'll have something, but until then this chart looks bearish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
I wanted to point out the new highs on the Transportation Index and that this leader has certainly been outperforming. The bulls will certainly want to see the other indices following this leader. The bears might look at this as being overbought and due for a pullback.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds moved higher on Friday and yields moved lower. The rising resistance line was broken on the AGG chart several days ago, and it looks like it may provide support now keeping the bullish trend in bonds intact.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
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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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