Stocks opened very strongly on Friday but investors seem concerned about holding over the weekend as headline continue to stream out of the Ukraine / Russia. By the close, the Dow had given up all of its a.m. triple digit gain, and many of the indices produced negative reversal days.
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The losses were small and the I-fund actually closed higher (and may pay the price today), but the technical setup was not very bullish with outside reversal days threatening the uptrend.
The SPY (S&P 500 / C-Fund) has some interesting setups going for it. There's the neckline from the inverted head and shoulders pattern trying to hold as support (blue). There is a rising wedge pattern (red) and they tend to break down. There is also a rising parallel trading channel (black) where the support line is very close to the bottom of the wedge and the 20-day EMA. Friday's action did produce a big negative reversal day after it hit new highs in early trading, but it was not an outside reversal day, which would be a little more bearish.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
That's what we saw on the Nasdaq. Friday's candlestick is a nasty outside reversal day and it closed just below the 20-day EMA. Volume was high on the reversal day and I think the Nasdaq needs some help quickly or a test of the 50-day EMA support may not be far off.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps of the Russell 2000 are in a large rising wedge pattern, not normally a good sign, but remains above some key support levels. This support line off of the February lows is a key level for many of the major market indices - that is if all of the support lines on various charts can hold keeping the rising trends alive.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Financial sector has led the way since Yellen's news conference on Wednesday and it actually closed at a new high, despite the weak close on Friday.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds remain in their tight trading range and unless you want to play the small swings within the range, you may want to see which way these charts break before doing anything with the F-fund.
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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