Stocks were mixed yesterday but the Dow added another 60-points, and the strong rebound off the lows continued. The Nasdaq and Russell were slightly lower while the S&P 500 added 0.25%.
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I didn't see what happened to trigger that sharp mid-day sell-off just before 2 PM ET, but whatever it was, it was quickly dismissed as the Dow was at a new intraday high by 3 PM.
The I-fund lost ground as the dollar soared close to new 52-week highs. Bonds were down and their charts are getting close to testing important support.
The SPY (S&P 500 / C-fund) pushed to new intraday highs yesterday, and made a new closing high. The rally has been powerful and relentless, but similar to other rebounds off of pullbacks that we've seen over the last few years. Volume remains light, but it's typical late August vacation-time trading.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
Taking a look at a 2-year chart shows that almost all attempts at new highs turn into new highs. With only a few exceptions, the new highs led to a continued rally. Several of the other breakouts never came back below the breakout level, but the ones marked in red did.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-Fund) was flat but the small caps of the Russell 2000 did lose 0.43%. It $RUT filled that open gap quickly, as we suspected, but it closed well off the lows and that's actually a bullish sign - at least during early trading on Thursday.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (I-Fund) was down but closed off the lows. This chart is still broken, but oversold, and a rebound was expected. The question is, can it recover like the U.S. indices with all of the economic issues in Europe?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
One of the reasons the I-fund has been lagging, other than the European economies, is the recent strength in the dollar - although the two are not mutually exclusive. This angle of incline by the UUP makes it tough for the I-fund, but how much longer can it go up without pulling back?
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The IEF (Bonds) broke below the recent short-term rising support line, but the real test will be just below 104 where this chart broke out from a cup and handle formation. Theoretically, based on a cup and handle formation, that area should hold.
Chart provided courtesy of www.stockcharts.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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