Stocks found their footing on Thursday as they opened higher and never looked back. The Dow gained 260-points as the bears stepped aside and let the bulls do their thing. As you will see in the charts below, it's not always as easy as a day like Thursday makes it look.
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The I-fund lagged and bonds were up. Oil was down, and the fact that stocks rallied sharply with oil falling further below $50, could be a good sign.
The SPY (S&P 500 / C-fund) popped back above the 50-day EMA and nearly filled the open gap that opened on Tuesday. We didn't get easy "V" bottoms at the prior lows so it wouldn't surprise me if the volatility sticks around a little while longer. A reversal down today (Friday) would certainly scare those who thought the worst was over and jumped back in on yesterday's rally, and if you look at the prior lows, that might be par for the course.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart successfully tested the low end of its long-term ascending trading channel.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) looks pretty sharp with the lows coming at the 50-day EMA. The small caps are less affected by the strong dollar so it may be why investors are jumping toward them.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The small caps have been leading, but the Dow Transportation Index is now also vying for that title. It had fallen well off the highs, but now it has broken above the falling resistance line and is back above the 50-day EMA. Again, we can't say that it's all clear now. If you look at prior lows we saw some fake-outs before.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE Index / I-fund) gapped up on Thursday nearly filling the old overhead gap. It also recaptured the 50 and 200-day EMAs, which I think is critical as it tries to officially lose the bear market status. It's almost a done deal, and it may be next week that we can put it back in bull market category.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (Bonds / F-fund) rallied above key resistance after a bear flag and head and shoulders breakdown last week. But for those who saw that H&S breakdown, once that downside target was reached near 109.60, that was basically the end of the formation and the bearishness. An oversold rebound was due, but this is a little more than I expected.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! Have a great weekend!
Tom Crowley
Posted daily at TSP Talk Market Commentary
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