Stocks shot up right after the open on Thursday, but ran out of steam by the afternoon. The early triple digit gain in the Dow turned negative about an hour before the close, but ended the day with a 32-point gain. The other indices were mixed with the I-fund leading the way and the small caps lagging.
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You can see the dramatic negative reversal in the two indices that have been lagging and in a downtrend. Both were up almost 1% before closing down nearly as much.
The S&P 500 popped over that hardcore resistance line that we have been watching near 1885, but once again it backed off from that level. It remains above the 20 and 50-day EMAs, and because of that, the chart does not look bad at all.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The small caps are another story. The IWM Russell 2000 ETF closed below the 200-day EMA for the first time since late 2012. This is the fourth time in the last few weeks that it has hit the 200-day, and it's time to start the 3 to 5 day support confirmation test.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq 100 fell back below the 20 and 50-day EMAs this week and fell through the possible support line it looked to be carving. It hasn't made a lower low yet so there is some hope that a new rising trend may be starting.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
An interesting sector is the semiconductors. Normally a leader for the Nasdaq, since it so heavily weighted in technology, the SOX has been performing much better than the Nasdaq - and more similar to the action in the Dow and S&P 500.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The reason could be that the tech leaders in the Nasdaq that have been pulling it down have more of the internet-type stocks like Netflix, Facebook, Twitter, etc., which are not part of the SOX. We'll have to see how this plays out as it could be a better indication of which way the Nasdaq might break.
Bonds were mixed on Thursday as a 30-year bond auction saw a sharp rise in the 30-year yield sending the 30-year bond and the TLT lower. The 10-year and shorter bonds did not react as poorly so we had a mix and it translated into a 0.07% gain for the F-fund.
Chart provided courtesy of www.decisionpoint.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
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.
