Stocks remained tentatively higher before yesterday's FOMC meeting, and after the policy statement was announced, we saw a modestly positive reaction into the close. The Dow ended the day up 45-points, which is actually put it at a new all-time closing high, while small caps finally outperformed.
All of that despite a disappointing GDP report which came in at 0.1% growth rate for the 1st quarter when estimates were looking for 1.0%. Weak data meant lower bond yields and a nice day for the F-fund.
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Here are the final returns for the month of April. The S-fund is clearly lagging and is clinging to a positive return for the year.
The SPY (S&P 500 / C-fund) pushed and closed, above the 188 level again, but that seems to be the area that has caused some problems. The broken record in me says, this chart looks bullish, but because the Nasdaq and the small cap charts do not, you have to wonder if this "follower" can hold up.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq looks like it is trying to bottom after it made a possible higher low after rebounding off of the 200-day EMA, but it remains in a downtrend and below the 50-day EMA. I don't think the Dow and S&P 500 can hold onto new highs, if that's where they are going, if the Nasdaq cannot break above its descending resistance line.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Wilshire 4500 (S-fund) is in the same situation, and it is not all that common to see this kind of divergence.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
As we turn into May, we start the weaker six-month period of the year.
Chart provided courtesy of www.sentimentrader.com, analysis by TSP Talk
This effect is also magnified during mid-term election years, which we are in this year.
Here's another tidbit from sentimenTrader.com regarding the end of April and a new high for the Dow:
"The Dow has closed at a 52-week high on the last day of April seven other times in its history. The next three months showed positive returns two times, negative returns five times, with an overall average return of -1.6%. At its best point during the next three months, it gained a median +1.9%, while at its worst point it lost a median -3.3%. The years were 1945, 1951, 1954, 1965, 1983, 1995 and 2011."
Bonds and the F-fund had a good day after the weak GDP number. Both the TLT and the IEF are heading toward their recent highs.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The April jobs report is due out on Friday. Estimates are looking for a gain of 210,000 jobs, with an unemployment rate of 6.6%. We have our monthly jobs report contest going on right now in the forum. More info: Guess the Jobs Report Contest for April
Read more in today's TSP Talk Plus Report. We post more charts and indicators, plus discuss the Sentiment Survey Results and its 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 TSP Talk Market Commentary
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