Stocks opened sharply higher on Monday, and while Monday morning gaps have a tendency to not be be trustworthy, the indices actually held onto the gains - or most of them - all day. The Dow ended the day up 182-points, while small caps lagged and bonds pulled back.
[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 small caps lagged and closed well off their morning trading highs, and that sets up a negative reversal day for today. The Nasdaq posted a similar pattern but still closed with a 0.8% gain.
The SPY (S&P 500 / C-Fund) posted a 0.9% gain and it came right on time if the inverted head and shoulders neckline was going to hold. The issue with the rally on Monday was that the indices could not hold the earlier highs, and trading volume was quite light compared to the Thursday and Friday sell-off days.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps created an obvious reversal day as we see the long "kangaroo tail" on yesterday's candlestick. I may be grasping at straws, but if we draw a parallel line to the overhead resistance line, it connects the two short-term recent lows, so perhaps this will be the start of new rising trading channel?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq also created a kangaroo tail yesterday and that could means at least some temporary weakness today, but the potential new rising support line is not far below the current levels and any weakness could be a quick test of a new trading channel.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds pulled back keeping these two bond ETFs in their recent sideways trading channel. The triple top breakout has failed so far and quadruple tops are rare so we need to see this breakout soon or bonds could be in trouble. On the other hand, any further pullback and we could be looking at a triple bottom test, so the support side may be in jeopardy soon too if tested again.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
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
It's that time of year again. Join our 2014 March Madness Contest!
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.
