Stocks gapped up on Friday's open after an agreement with Greece was being portrayed as nearly a done deal. The Dow gained 212-points and most indies posted solid gains of over 1%.
The bad news? That optimism over a possible deal has waned over the weekend and the concerns have turned to the euro, so here we go again. Stocks could be under some pressure in Europe to start the week, and the S&P 500 futures opened with a loss of about 14-points (-0.70%) but they stabilized quickly and the losses are shrinking as I write this.
Update: It looks like a deal has been worked out and the futures have turned around and are now positive. [TABLE="align: center"]
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Both the C and S-fund gained 1.23% on Friday while the I-fund had back-to-back +2% days. That was still not enough as the EFA was up 3.3% on Friday, so the I-fund may be due some payback with today's price. Bonds gave back some recent gains.
The SPY (S&P500 / C-fund) had a big day and it looks like it is trying to put in a low here, but there is a big bear flag still on the chart and the futures are pointing downward Sunday night.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The weekly chart of the S&P 500 shows a nice positive weekly reversal bar, and it is trying to hold above the 50-week moving average - something it has only broken once going back to late 2012.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Dow Completion Index (S-fund) found support at the 200-day EMA last week, which is quite an important level to hold psychologically. Even if its a self-fulfilling prophesy, investors will be more inclined to sell if that level is broken. On the other hand, if the 200_EMA holds and we get a bounce like we saw on Friday, investors will feel more comfortable buying again.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The EFA (EAFE index / I-fund) has been having a gap-fest. The red-filled box shows a filled gap while the three others are still open - two below and one above. The EFA is back above the 200-day EMA, and depending on how investors react to the weekend news out of Europe, holding or breaking back below today could be the key to this week's action. It looks like the futures may have the EFA slightly below it again, but it would actually be nice to see that first gap get at least partially filled before the EFA goes much higher.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The Shanghai Index in China put in a second big rally day on Friday but still remains in a very negative trading channel. There's still a lot of work to be done here, although getting back above the 200-day EMA is a good first step.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
The AGG (bonds / F-fund) fell as stocks rallied. Investors jumped into bonds as the market began to stumble, but it will likely be the first to fall if stocks can rally this week. The fact that it is back below the 50 and 200-day EMAs is one clue that stocks could have some staying power. Of course one bad headline could have us believe that is not the case, but that's not what the chart is telling us right now.
Chart provided courtesy of www.stockcharts.com, analysis by TSP Talk
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Thanks for reading! We'll see you back here tomorrow.
Tom Crowley
Posted daily at www.tsptalk.com/comments.php
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