Stocks rallied strongly on Cyber Monday after getting hit hard during the normally strong Thanksgiving week. The Dow gained 354-points on the day and we saw 1% plus gains across the board. Recovering from a mid-day sell-off to close at the highs was the impressive part, creating an intraday "V" low, which tends to roll into the next day, at least early on. But the charts still have some issues and there is some resistance that the S&P 500 will have to deal with if we do see any gains today.
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Last week some of the articles out there saying things like, "Almost 3 in 10 shoppers are going into the holiday season still carrying debt from last year's festivities" and, "Thanksgiving Day foot traffic dips 1 percent from 2017." That led to the worst Black Friday for stocks since 2011. That all changed on Monday after a record breaking weekend for retail. So the market snubbed it's nose at all the sellers on Friday.
After the bell some hawkish comments from President Trump regarding Chinese tariffs sent Apple's stock, and the after hours index futures, lower. So yes, we got good data out of the retail sector this weekend, but that's not what the market has been concerned about. It's still about interest rates and tariffs.
Trading volume was still light making it feel a little like holiday action, but a 1.5% gain is real whether volume is light or heavy. The question is whether it can hold. So this is not an "all's clear" sign yet. As you'll see in the charts below, there are still some technical roadblocks.
The S&P 500 / C-fund rallied sharply on Monday and it reached up to poke its head into the open gap from last week. The gap is not filled yet and the top of that gap could create some resistance, which would coincide with the descending resistance line off the November peak. This could pose at least some short-term resistance for the S&P, but if it can take that out, the 20-day EMA could be the next level to test. But let's see if the bulls can take out that first double dose of resistance near 2680.
The DWCPF (S-fund) actually did break above a short-term descending resistance line as it moved above that small red trading channel. It has already held at the October lows, at least on the first test, but the overhead resistance has multi-levels with the 20-day EMA and the longer-term descending resistance line (blue) still in the picture.
The Dow Transportation Index has been stalling at the 50 and 200-day EMA's which is what you'd expect when in a bearish market, but there is also a bull flag (blue) formed that could put a test to that overhead resistance should it breakout, as bull flags tend to do.
The EAFE Index / I-fund rallied yesterday but I wanted to take a look at the emerging markets chart which shows just how long a downtrend can persist. J.P. Morgan came out saying that emerging markets could outperform U.S. stocks in 2019, but this would have to break its trading channel first, I would think.
A quick look at China's Shanghai Index chart shows a breakdown from some kind of bearish flag. Some say China's market going down means the U.S. is winning the trade war, but if you remember, their market has been breaking down since February, and the U.S. market has been several months behind. So what does this tell us if the Shanghai is breaking down again?
The High Yield Corporate Bonds got a bounce of its lows yesterday but it could be making a bearish flag here.
The AGG (bonds / F-fund) was relatively flat yesterday but remained above the 50-day EMA but below the top of the range that we are watching, between 104.00 and 104.80.
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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Last week some of the articles out there saying things like, "Almost 3 in 10 shoppers are going into the holiday season still carrying debt from last year's festivities" and, "Thanksgiving Day foot traffic dips 1 percent from 2017." That led to the worst Black Friday for stocks since 2011. That all changed on Monday after a record breaking weekend for retail. So the market snubbed it's nose at all the sellers on Friday.
After the bell some hawkish comments from President Trump regarding Chinese tariffs sent Apple's stock, and the after hours index futures, lower. So yes, we got good data out of the retail sector this weekend, but that's not what the market has been concerned about. It's still about interest rates and tariffs.
Trading volume was still light making it feel a little like holiday action, but a 1.5% gain is real whether volume is light or heavy. The question is whether it can hold. So this is not an "all's clear" sign yet. As you'll see in the charts below, there are still some technical roadblocks.
The S&P 500 / C-fund rallied sharply on Monday and it reached up to poke its head into the open gap from last week. The gap is not filled yet and the top of that gap could create some resistance, which would coincide with the descending resistance line off the November peak. This could pose at least some short-term resistance for the S&P, but if it can take that out, the 20-day EMA could be the next level to test. But let's see if the bulls can take out that first double dose of resistance near 2680.
The DWCPF (S-fund) actually did break above a short-term descending resistance line as it moved above that small red trading channel. It has already held at the October lows, at least on the first test, but the overhead resistance has multi-levels with the 20-day EMA and the longer-term descending resistance line (blue) still in the picture.
The Dow Transportation Index has been stalling at the 50 and 200-day EMA's which is what you'd expect when in a bearish market, but there is also a bull flag (blue) formed that could put a test to that overhead resistance should it breakout, as bull flags tend to do.
The EAFE Index / I-fund rallied yesterday but I wanted to take a look at the emerging markets chart which shows just how long a downtrend can persist. J.P. Morgan came out saying that emerging markets could outperform U.S. stocks in 2019, but this would have to break its trading channel first, I would think.
A quick look at China's Shanghai Index chart shows a breakdown from some kind of bearish flag. Some say China's market going down means the U.S. is winning the trade war, but if you remember, their market has been breaking down since February, and the U.S. market has been several months behind. So what does this tell us if the Shanghai is breaking down again?
The High Yield Corporate Bonds got a bounce of its lows yesterday but it could be making a bearish flag here.
The AGG (bonds / F-fund) was relatively flat yesterday but remained above the 50-day EMA but below the top of the range that we are watching, between 104.00 and 104.80.
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.
