Stocks opened slightly higher on Tuesday, rallied modestly into mid-afternoon, and finally faded as we neared the close. The Dow gained 30-points on the day but it gave back an earlier triple digit gain with that weak close. The small caps outperformed with the Russell 2000 Index gaining 0.66% and our S-fund small/mid-cap fund gaining just under a half of a percent.
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Some of the headlines yesterday came from the oil industry as the President weighed in on the oil market saying he wants the U.S. and its allies to cut oil imports from Iran to zero. That sent the price of oil up over $2 a barrel in midday trading. So, after a steep pullback in May, we're seeing a push toward the 2018 highs again, which could be a good or a bad thing, depending on which way we look at it. From a consumer's point of view, higher oil tends to cost us money, but it could push oil related stocks up helping the stock market.
Another interesting angle yesterday was the continued weakness from the financial sector which remains stuck below its 200-day EMA and at the bottom of a head and shoulders pattern that looks like it's ready to break down. So the question is, can stocks in general continue higher if financials rollover from here and this chart breaks down?
The S&P 500 / C-fund was up but it was floundering under the 50-day EMA for most of the day so we weren't seeing a "V" bottom of Monday's sell-off. Right now it's a battle between the dip buyers and the bears who see an opportunity to push this down again. These bears are likely gun-shy however, since the dip buyers have been in control since the February lows. But whenever the index is below the 50-day EMA the bears have the technical edge - until the bulls can push it back above it.
The small caps (S-fund) saw a reasonable snap back rally and they held onto their intraday gains a little better than the large caps. The problem technically is that it is below its rising support line with the 50-day EMA about 1% below the current levels as the next area of support. The open gap above is always a potential target from any snap-back rally.
The Dow Jones Transportation was down again and this may have been oil related since many of the airlines stocks were down on the day.
The EAFE Index (I-fund) is sitting near the recent lows and again this chart looks very similar to the Financials' chart. That is, it's a head and shoulders pattern on the verge of a potential breakdown.
The AGG (Bonds / F-fund) was up and the ETF have not been great at telling us what the F-fund is doing this week. The TLT Bond ETF was also up, yet so was the yield on the 10-year Treasury Note and we'd expect that to move in the opposite direction to these ETFs. There's a base building on this chart but since it is between the recent highs and lows on the AGG, it's tough to determine which way this wants to go. With the Fed ready to pull the trigger on another rate hike, I would have to favor this eventually falling.
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
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
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Some of the headlines yesterday came from the oil industry as the President weighed in on the oil market saying he wants the U.S. and its allies to cut oil imports from Iran to zero. That sent the price of oil up over $2 a barrel in midday trading. So, after a steep pullback in May, we're seeing a push toward the 2018 highs again, which could be a good or a bad thing, depending on which way we look at it. From a consumer's point of view, higher oil tends to cost us money, but it could push oil related stocks up helping the stock market.
Another interesting angle yesterday was the continued weakness from the financial sector which remains stuck below its 200-day EMA and at the bottom of a head and shoulders pattern that looks like it's ready to break down. So the question is, can stocks in general continue higher if financials rollover from here and this chart breaks down?
The S&P 500 / C-fund was up but it was floundering under the 50-day EMA for most of the day so we weren't seeing a "V" bottom of Monday's sell-off. Right now it's a battle between the dip buyers and the bears who see an opportunity to push this down again. These bears are likely gun-shy however, since the dip buyers have been in control since the February lows. But whenever the index is below the 50-day EMA the bears have the technical edge - until the bulls can push it back above it.
The small caps (S-fund) saw a reasonable snap back rally and they held onto their intraday gains a little better than the large caps. The problem technically is that it is below its rising support line with the 50-day EMA about 1% below the current levels as the next area of support. The open gap above is always a potential target from any snap-back rally.
The Dow Jones Transportation was down again and this may have been oil related since many of the airlines stocks were down on the day.
The EAFE Index (I-fund) is sitting near the recent lows and again this chart looks very similar to the Financials' chart. That is, it's a head and shoulders pattern on the verge of a potential breakdown.
The AGG (Bonds / F-fund) was up and the ETF have not been great at telling us what the F-fund is doing this week. The TLT Bond ETF was also up, yet so was the yield on the 10-year Treasury Note and we'd expect that to move in the opposite direction to these ETFs. There's a base building on this chart but since it is between the recent highs and lows on the AGG, it's tough to determine which way this wants to go. With the Fed ready to pull the trigger on another rate hike, I would have to favor this eventually falling.
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
Thanks for reading. We'll see you back here tomorrow.
Tom Crowley
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.
