Stocks bounced back yesterday as whatever spooked the market on Monday was clearly dismissed on Tuesday. The Dow recovered 116-points of its 179-point loss on Monday, while the S&P 500 took back a little more, and the small caps recovered nearly all of their losses from Monday. Bonds pulled back.
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The S&P 500 (SPY) produced an inside day where yesterday's high was lower than Monday's highs, and yesterday's low was higher than Monday's low. There is a short-term trend going on that could turn out to be a bull flag. The volume on the S&P 500 wasn't all that telling but look at the volume on the SPY chart...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There were a lot more shares of SPY sold on Monday than were bought yesterday. Perhaps that just meant that investors were tentative to jump after Monday's trouble, meaning sentiment may have been overly bearish - which could be bullish, but not all that telling.
As for the 1929 chart comparison, the Dow and the S&P have not made new highs yet in 2014 so the question is, will the late 2013 highs be a peak? After yesterday's action I would think that new highs are in sight since it happened repeatedly in 2013, but the market loves to get us leaning the wrong way.
The small caps are in the same boat - close to new highs with a flag-like possible breakout coming.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Initially the cause of Monday's sell-off was negative earnings pre-announcements. How that changed on Wednesday, I don't know. All of this comes on the heals of a weak jobs report last week, which I guess is being interpreted as continued assistance from the Fed? As you can see, I have more questions than answers.
The dollar opened flat but closed slightly higher and the UUP is playing jump rope with the 20 and 50-day EMAs. There are gaps to fill on either side of the UUP with the one below being larger, and if that larger gap fills it will test what may end up being the bottom of a new rising trading channel.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds pulled back after rallying for several days. There are open gaps triggered by the jobs report rally in bonds, but the 7 to 10 year bond has pulled back to the 50-day EMA, after breaking above it last week, so that may act as support now. But I'd rather see the gap get filled or we'll be looking over our shoulder until it happens.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So the jobs report triggered a big rally in bonds on Friday while stocks were relatively flat. They (stocks) eventually sold off on Monday while bonds were up again. Tuesday we get a big spike in stock prices while bonds pull back very modestly. If the rally in bonds continues, I will look at this as a negative for the stock market since bond traders are usually a little more savvy than stock market traders. It's a leading indicator, if you will. So, let the stock market do its thing over the next few days, but the bond market may be the key to the next big move for stocks.
Read more in today's TSP Talk Plus Report. We post more charts and indicators, plus discuss the Sentiment Survey Results and its System. 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 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.
[TABLE="width: 79%, align: center"]
[TR]
[TD]
[TD="align: center"]Daily TSP Funds Return
[TR]
[TD="align: right"]More returns [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The S&P 500 (SPY) produced an inside day where yesterday's high was lower than Monday's highs, and yesterday's low was higher than Monday's low. There is a short-term trend going on that could turn out to be a bull flag. The volume on the S&P 500 wasn't all that telling but look at the volume on the SPY chart...
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
There were a lot more shares of SPY sold on Monday than were bought yesterday. Perhaps that just meant that investors were tentative to jump after Monday's trouble, meaning sentiment may have been overly bearish - which could be bullish, but not all that telling.
As for the 1929 chart comparison, the Dow and the S&P have not made new highs yet in 2014 so the question is, will the late 2013 highs be a peak? After yesterday's action I would think that new highs are in sight since it happened repeatedly in 2013, but the market loves to get us leaning the wrong way.
The small caps are in the same boat - close to new highs with a flag-like possible breakout coming.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Initially the cause of Monday's sell-off was negative earnings pre-announcements. How that changed on Wednesday, I don't know. All of this comes on the heals of a weak jobs report last week, which I guess is being interpreted as continued assistance from the Fed? As you can see, I have more questions than answers.
The dollar opened flat but closed slightly higher and the UUP is playing jump rope with the 20 and 50-day EMAs. There are gaps to fill on either side of the UUP with the one below being larger, and if that larger gap fills it will test what may end up being the bottom of a new rising trading channel.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds pulled back after rallying for several days. There are open gaps triggered by the jobs report rally in bonds, but the 7 to 10 year bond has pulled back to the 50-day EMA, after breaking above it last week, so that may act as support now. But I'd rather see the gap get filled or we'll be looking over our shoulder until it happens.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
So the jobs report triggered a big rally in bonds on Friday while stocks were relatively flat. They (stocks) eventually sold off on Monday while bonds were up again. Tuesday we get a big spike in stock prices while bonds pull back very modestly. If the rally in bonds continues, I will look at this as a negative for the stock market since bond traders are usually a little more savvy than stock market traders. It's a leading indicator, if you will. So, let the stock market do its thing over the next few days, but the bond market may be the key to the next big move for stocks.
Read more in today's TSP Talk Plus Report. We post more charts and indicators, plus discuss the Sentiment Survey Results and its System. 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 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.
