Stocks moved higher on Tuesday morning and held those gains for most of the day until some late afternoon selling took the steam out of the rally. The Dow ended the day at 17,938, up 18-points, but down from the 83-point gain earlier which briefly had it back above the 18,000 level.
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The price of oil has been resilient, continuing its rising trend and closing above $50 for the first time since last summer. This is a decent sign for the economy, but some of the recent strength has to do with the decline in the dollar over the last week.
The SPY (S&P 500 / C-Fund) made a higher high early on Tuesday but retreated late and created a small negative reversal day despite the gain. The bulls will look for the April high to hold but there may be a rising wedge that could add some downward pressure. So, the bulls still have the ball in their but the bears may be looking to make a move here. The question is, can they?
The longer-term charts shows a large inverted head and shoulders pattern formed and possibly breaking out. Finding some resistance at old highs is common, but triple tops don't tend to fail as often as double tops and yesterday's actually broke above the neckline of that inverted H&S. Should this breakout hold, the upside target would be fairly impressive considering the size of this H&S.
The DWCPF (S-fund) made a new 2016 high and the small caps continue to outperform in recent weeks.
The Dow Transportation Index made an interesting move yesterday. After struggling below the 200-day EMA for weeks, it made an impressive move above it with a 1% gain on Tuesday. We like to see 3 to 5 closes above a breakout point to confirm it, but this is a good start for this market leader.
The EFA (I-fund) has also been impressive of late with the help of the falling dollar. It gapped up slightly yesterday and continues to make a series of higher lows. It's next job will be to make another higher high.
The AGG (Bonds / F-fund) was up slightly as last Thursday's rally has held up so far. Investors seem to be all but certain that the Fed will not be raising interest rates this month. Bonds go up when yields move lower.
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