03/18/26
Stocks were up again yesterday but the morning rally was quickly sold, and for the sixth trading day in a row the S&P 500 closed well off its intraday highs. The modest gain kept the rally off the recent lows going, but with the Fed meeting today, investors seemed tentative to do much of anything, especially with the price of oil up again.
It is certainly possible that the lows are not in, and some investors are waiting for some kind of capitulation, but as we pointed out yesterday, we didn't see that at the lows in November. Plus, the S&P 500 is down just 4% off its all time highs, so capitulation sounds too strong a word to describe what we've been through, despite the what felt like chaos and volatility.
Fear is high right now. The CNN Fear & Greed Index is in the Extreme Fear territory, and typically this is a contrarian indicator and a good sign that the selling is getting overdone, although it can go lower first.
Last year at this time we saw a similar level of Fear (22) and it was actually precursor to another leg lower in stocks, and of course that was right after the Liberation Day tariffs went into effect.
So the elevated Fear was a warning, rather than a contrarian buy signal - at least for a few weeks. The Fear got worse before we got the bottom in April of last year, but what a bottom it was. The higher the Fear, typically the bigger the bounce, so the fact that stocks are not jumping off the lows may mean we need more Fear before things get better? Maybe, maybe not.
The S&P 500 (C-fund) came close to the 200-day average last week, which is often a target for a pullback or correction, but it couldn't even fill in the open gap which is also a typical draw. I didn't like that yesterday's highs were at the bottom of that blue bull flag I have been watching, and broke down earlier this month. Support, once broken, can be resistance.
I mentioned before that during mid-term election years, the average draw down off the high is 18%, and we have only seen a 5.5% decline off the high so things could eventually get worse.
I'm not saying the market is going lower, nor am I saying that the lows are in, but we're getting close to a sweet spot in the short-term where Fear is getting elevated, and support is in the area, and when the market does snap back it could be explosive so both the bulls and the bears could feel some pain in the short-term, depending on a few things.
That's not very helpful but there are many investors and traders trying to make this decision, and nobody knows for sure. Pick a side, understand your risk tolerance, and place your bets.
Oil is one of those things that we're depending on and the move up in the price to 96 kept a lid on yesterday's rally. The lower support line held by the close and it continues to flirt with 100.
The 10-year Treasury Yield was down yesterday, and that's good in that we don't want to see this chart go straight up, or straight down. It looks like a potential inverted head and shoulders pattern, which would tend to eventually break to the upside, so we'll see if the 200-day average holds as support in the right shoulder like it did in the left shoulder.
A breakout to new highs would likely mean oil is moving over 100, but if support breaks, it could mean a more dovish outlook for oil and the war in Iran.
The weekly charts of the S&P 500 and Nasdaq 100 are both at very critical levels. The 40-week averages are being tested on both, and...
... there is a long support line being tested as well on the big tech Nasdaq 100 Index. Can AI and Mag 7 stocks stop their bleeding? That would likely put an end to the pullback.
Today will be day #2 of the two-day FOMC Meeting and we will get the Fed's policy statement at 2 PM ET. There is a 1% chance of a rate cut being priced in for this meeting, so it will be more about what they say, rather than what they do.
Administrative Note: We have a chance for a little distraction this week with the March Madness Tournament starting. So, if you're ready for our annual March Madness Contest, please go here for more info! It's free and prizes are awarded. The deadline to enter is the start of the first game on Thursday.
Additional TSP Fund Charts:
DWCPF (S-fund) rallied and had a decent gain, but the action was iffy at beast with it closing well off the highs, and falling short of the neckline of the head and shoulders pattern. I will give it the benefit of the doubt that there were some tentative traders and investors yesterday with the Fed looming today.
ACWX (I-fund) was up, but we'll see what the TSP does with the price. We've had two days in a row with significant under-pricing of the I-fund so it was due for a positive adjustment on Tuesday. The price hasn't been posted yet as of this writing. The 20-day average (green) was strong support for months, so it could turn out to be tough resistance on the way back up.
BND (bonds / F-fund) rallied nicely and is now testing a triple dose of resistance just above 74.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
Stocks were up again yesterday but the morning rally was quickly sold, and for the sixth trading day in a row the S&P 500 closed well off its intraday highs. The modest gain kept the rally off the recent lows going, but with the Fed meeting today, investors seemed tentative to do much of anything, especially with the price of oil up again.
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It is certainly possible that the lows are not in, and some investors are waiting for some kind of capitulation, but as we pointed out yesterday, we didn't see that at the lows in November. Plus, the S&P 500 is down just 4% off its all time highs, so capitulation sounds too strong a word to describe what we've been through, despite the what felt like chaos and volatility.
Fear is high right now. The CNN Fear & Greed Index is in the Extreme Fear territory, and typically this is a contrarian indicator and a good sign that the selling is getting overdone, although it can go lower first.
Last year at this time we saw a similar level of Fear (22) and it was actually precursor to another leg lower in stocks, and of course that was right after the Liberation Day tariffs went into effect.
So the elevated Fear was a warning, rather than a contrarian buy signal - at least for a few weeks. The Fear got worse before we got the bottom in April of last year, but what a bottom it was. The higher the Fear, typically the bigger the bounce, so the fact that stocks are not jumping off the lows may mean we need more Fear before things get better? Maybe, maybe not.
The S&P 500 (C-fund) came close to the 200-day average last week, which is often a target for a pullback or correction, but it couldn't even fill in the open gap which is also a typical draw. I didn't like that yesterday's highs were at the bottom of that blue bull flag I have been watching, and broke down earlier this month. Support, once broken, can be resistance.
I mentioned before that during mid-term election years, the average draw down off the high is 18%, and we have only seen a 5.5% decline off the high so things could eventually get worse.
I'm not saying the market is going lower, nor am I saying that the lows are in, but we're getting close to a sweet spot in the short-term where Fear is getting elevated, and support is in the area, and when the market does snap back it could be explosive so both the bulls and the bears could feel some pain in the short-term, depending on a few things.
That's not very helpful but there are many investors and traders trying to make this decision, and nobody knows for sure. Pick a side, understand your risk tolerance, and place your bets.
Oil is one of those things that we're depending on and the move up in the price to 96 kept a lid on yesterday's rally. The lower support line held by the close and it continues to flirt with 100.
The 10-year Treasury Yield was down yesterday, and that's good in that we don't want to see this chart go straight up, or straight down. It looks like a potential inverted head and shoulders pattern, which would tend to eventually break to the upside, so we'll see if the 200-day average holds as support in the right shoulder like it did in the left shoulder.
A breakout to new highs would likely mean oil is moving over 100, but if support breaks, it could mean a more dovish outlook for oil and the war in Iran.
The weekly charts of the S&P 500 and Nasdaq 100 are both at very critical levels. The 40-week averages are being tested on both, and...
... there is a long support line being tested as well on the big tech Nasdaq 100 Index. Can AI and Mag 7 stocks stop their bleeding? That would likely put an end to the pullback.
Today will be day #2 of the two-day FOMC Meeting and we will get the Fed's policy statement at 2 PM ET. There is a 1% chance of a rate cut being priced in for this meeting, so it will be more about what they say, rather than what they do.
Administrative Note: We have a chance for a little distraction this week with the March Madness Tournament starting. So, if you're ready for our annual March Madness Contest, please go here for more info! It's free and prizes are awarded. The deadline to enter is the start of the first game on Thursday.
Additional TSP Fund Charts:
DWCPF (S-fund) rallied and had a decent gain, but the action was iffy at beast with it closing well off the highs, and falling short of the neckline of the head and shoulders pattern. I will give it the benefit of the doubt that there were some tentative traders and investors yesterday with the Fed looming today.
ACWX (I-fund) was up, but we'll see what the TSP does with the price. We've had two days in a row with significant under-pricing of the I-fund so it was due for a positive adjustment on Tuesday. The price hasn't been posted yet as of this writing. The 20-day average (green) was strong support for months, so it could turn out to be tough resistance on the way back up.
BND (bonds / F-fund) rallied nicely and is now testing a triple dose of resistance just above 74.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
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.
