After a couple of sideways days following Friday's big rally, stocks jumped again - breaking through some key levels. The Dow gained 182-points and the large caps finally out-gained the small caps. The price of oil hit a multi-year high again and that may have been the catalyst, but there were other factors at work as well.
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The 10-year Treasury hit 3% again yesterday and that initially spooked the market as the indices gave up some early gains, but as the day wore on it seems investors have become comfortable with that 3% level. Will they be comfortable with 3.25% or 3.5%? We'll see.
3.03% was the high late last month and while this chart looks bullish on the yield (bearish on bond prices), 3.03% could mark another double top as we saw with 2.94% in March.
The price of oil and the energy stocks have been soaring again, and despite some of that being geopolitically generated, it is a good sign for the economy, as long as gas prices don't get out of control.
The gains in oil are even more impressive with the dollar rallying at the same time. A strong dollar is a stiff wind at the head of oil, but that isn't stopping it from hitting those new highs. Historically when oil and the dollar are both rallying, it has been a decent sign for stocks going forward.
That said, an economy that is running on all cylinders may have the market closer to a top than a bottom for various reasons, which I will get into more in our TSP Talk Plus report today.
Admin Note: If anyone is interested in our free annual Player's Championship Golf Tournament Pool, please click here for more info. Deadline is early Thursday after the first tee-time.
The S&P 500 / C-fund broke through a key level of resistance, particularly the 50-day EMA, and the two day consolidation may have been a bull flag (orange), although the large bear flag (blue) may still be in play. The next resistance area to watch is near 2705, but that one shouldn't be as challenging as the 50-day average. The nearly 1% gain outperformed the small caps for the first time in a while.
The small caps / S-fund were up 0.67% and it has been sailing along above the 50-day EMA for a few days now. If that head and shoulders pattern that we have been watching does move up to test the middle of the head, I'd expect that 1405 area to be tougher resistance.
The Dow Transportation Index broke above its descending resistance line, this time closing above it.
The EAFE / I-fund is inching up and has been held back by the rally in the dollar. But technically it has taken out some key resistance recently.
The AGG (Bonds / F-fund) continues to get hit as the yield on the 10-year Treasury hangs around the 3% area.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the 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
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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.
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[TD="align: right"][/TD]
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The 10-year Treasury hit 3% again yesterday and that initially spooked the market as the indices gave up some early gains, but as the day wore on it seems investors have become comfortable with that 3% level. Will they be comfortable with 3.25% or 3.5%? We'll see.
3.03% was the high late last month and while this chart looks bullish on the yield (bearish on bond prices), 3.03% could mark another double top as we saw with 2.94% in March.
The price of oil and the energy stocks have been soaring again, and despite some of that being geopolitically generated, it is a good sign for the economy, as long as gas prices don't get out of control.
The gains in oil are even more impressive with the dollar rallying at the same time. A strong dollar is a stiff wind at the head of oil, but that isn't stopping it from hitting those new highs. Historically when oil and the dollar are both rallying, it has been a decent sign for stocks going forward.
That said, an economy that is running on all cylinders may have the market closer to a top than a bottom for various reasons, which I will get into more in our TSP Talk Plus report today.
Admin Note: If anyone is interested in our free annual Player's Championship Golf Tournament Pool, please click here for more info. Deadline is early Thursday after the first tee-time.
The S&P 500 / C-fund broke through a key level of resistance, particularly the 50-day EMA, and the two day consolidation may have been a bull flag (orange), although the large bear flag (blue) may still be in play. The next resistance area to watch is near 2705, but that one shouldn't be as challenging as the 50-day average. The nearly 1% gain outperformed the small caps for the first time in a while.
The small caps / S-fund were up 0.67% and it has been sailing along above the 50-day EMA for a few days now. If that head and shoulders pattern that we have been watching does move up to test the middle of the head, I'd expect that 1405 area to be tougher resistance.
The Dow Transportation Index broke above its descending resistance line, this time closing above it.
The EAFE / I-fund is inching up and has been held back by the rally in the dollar. But technically it has taken out some key resistance recently.
The AGG (Bonds / F-fund) continues to get hit as the yield on the 10-year Treasury hangs around the 3% area.
Read more in today's TSP Talk Plus Report. We post more charts, indicators and analysis, plus discuss the allocations of the 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
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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.
