Stocks took a 2nd day of losses after Friday's jobs report, and the pre-holiday rally. The most bullish seasonal period were the days just before the 4th of July and we're just seeing a little unwinding of some of those pre-holiday gains, which were a little stronger than we might expect for a seasonal boost. The Dow lost a modest 116-points on Monday, or 0.43%. The Nasdaq and small caps lagged a bit, but none of the charts look all that bad at the moment.
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When I look at some of the index charts I don't see a whole lot of problems, as long as the S&P 500 can remain above the recent breakout levels, and flags that are on many of the charts do what they are supposed to do, which is breakout to the upside.
The problem is, a lot is about to happen in the next few weeks of July including earnings reports, and the Fed's decision on interest rates at the end of the month. But in the interim the Fed won't be silent. On Wednesday we will get the FOMC meeting minutes and on Wednesday and Thursday this week Federal Reserve Chair Powell will give his Senate testimony, so there could be more Fed / interest rate fireworks this week.
Obviously the market will be all ears waiting for clues to the futures of interest rates. The charts, as I mentioned, may be looking for a reason to break to the upside, but any obstacles could send investors fleeing and taking the profits from the recent 5-week rally.
The S&P 500 (C-fund) broke above the resistance line during the pre-holiday trading week last week, and so far, despite a couple of down days, it has been able to hold above it. A breakdown below that resistance would not be good and would create a failed breakout pattern, which tends to get sold. The rising support line off the June 1 lows was cracked yesterday and that needs to be watched, although that angle of incline that we got off the low was very steep and not realistically sustainable.
The DWCPF (S-fund) was down sharply yesterday, giving back nearly all of the prior two days' gains. From a technical perspective, that looks like a bull flag forming, and with the prior highs just overhead, that really needs to breakout to avoid a double top pullback.
The Dow Transportation Index was down yesterday but once again it has been able to hold above the 200-day EMA after it broke above it at the end of June. There's another possible bull flag forming, so that's two pluses here.
The I-fund slipped as the dollar rallied again, and while the losses weren't too significant, the index did fall back below the resistance line, after falling below the rising support line on Friday.
The High Yield Corporate Bond Fund dipped for a second straight day and has now fallen below a short-term rising trading channel. There is still a large open gap near 86 that may need attention eventually, and the 50-day EMA is right at the bottom of that gap so it is a viable target if the downside continues.
AGG (Bonds / F-fund) was down slightly and remains below the broken down rising channel. Bonds have certainly needed a break, but will they fall all the way down to the next serious area of support near 110? It's been a long time since we've seen losses in the bond market like that.
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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When I look at some of the index charts I don't see a whole lot of problems, as long as the S&P 500 can remain above the recent breakout levels, and flags that are on many of the charts do what they are supposed to do, which is breakout to the upside.
The problem is, a lot is about to happen in the next few weeks of July including earnings reports, and the Fed's decision on interest rates at the end of the month. But in the interim the Fed won't be silent. On Wednesday we will get the FOMC meeting minutes and on Wednesday and Thursday this week Federal Reserve Chair Powell will give his Senate testimony, so there could be more Fed / interest rate fireworks this week.
Obviously the market will be all ears waiting for clues to the futures of interest rates. The charts, as I mentioned, may be looking for a reason to break to the upside, but any obstacles could send investors fleeing and taking the profits from the recent 5-week rally.
The S&P 500 (C-fund) broke above the resistance line during the pre-holiday trading week last week, and so far, despite a couple of down days, it has been able to hold above it. A breakdown below that resistance would not be good and would create a failed breakout pattern, which tends to get sold. The rising support line off the June 1 lows was cracked yesterday and that needs to be watched, although that angle of incline that we got off the low was very steep and not realistically sustainable.
The DWCPF (S-fund) was down sharply yesterday, giving back nearly all of the prior two days' gains. From a technical perspective, that looks like a bull flag forming, and with the prior highs just overhead, that really needs to breakout to avoid a double top pullback.
The Dow Transportation Index was down yesterday but once again it has been able to hold above the 200-day EMA after it broke above it at the end of June. There's another possible bull flag forming, so that's two pluses here.
The I-fund slipped as the dollar rallied again, and while the losses weren't too significant, the index did fall back below the resistance line, after falling below the rising support line on Friday.
The High Yield Corporate Bond Fund dipped for a second straight day and has now fallen below a short-term rising trading channel. There is still a large open gap near 86 that may need attention eventually, and the 50-day EMA is right at the bottom of that gap so it is a viable target if the downside continues.
AGG (Bonds / F-fund) was down slightly and remains below the broken down rising channel. Bonds have certainly needed a break, but will they fall all the way down to the next serious area of support near 110? It's been a long time since we've seen losses in the bond market like that.
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.
