Stocks rallied, and rallied hard out of the gate on Monday morning, but it didn't take the bears long to start to chip away at the gains. The Dow was up 352-points at the early peak, but after fading lower into early afternoon, a spike lower in late afternoon trading had the Dow down 566-points. If you do that math that a decline of over 900-points from high to low, which may or may not be a capitulation sell-off, but there was certainly highly concerned investors. We did get a decent bounce into the close and that erased over 300 of that -566 decline by the time the bell rang.
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The 1% loss in the Dow, and 1.6% loss in the Nasdaq were impacted by a couple of stocks that had been leading all year on the upside.
The tragic plane crash in Indonesian triggered big losses in Boeing's stock which accounted for all but about 50-points in the Dow's 245-point loss yesterday. And Amazon had another tough day impacting the tech sector and Nasdaq.
Outside of that, the S&P was down "just" 0.66% while small caps were off 0.44%. Not great days, but nothing disastrous - unless you look at those high to low declines and then it looks worse.
We said yesterday that "markets don't tend to bottom on Fridays so Monday may be another tough one at some point during the day." But it sets up one of those possible Turnaround Tuesdays again. We had one last week that was short-lived but here we are again.
We've analyzed it to death so I'll make this kind of quick since we're basically in the same boat. We have become oversold and may be due for some relief. The relief rallies have been big, but short lived. We put in a semi-decent positive reversal off the lows yesterday, but we also just witnessed a major failure at yesterday's highs.
At some point this will snap back. Will it be today, Turnaround Tuesday? Next week? Next month after the election? Our indicators suggest it could be soon, but they have been saying that for a week or more, and as we've said before, the market can go down (or up) longer than we think seems reasonable. We'll just have to let it play out.
The S&P 500 / C-fund had a wild, wide trading day. It tried to test the top of that falling wedge early, and the wedge resistance held it back. Then it fell to the bottom of the wedge, and it broke. It did manage to close back in the wedge so it's possible that was the "capitulation" although maybe just a short-term capitulation? That is, even if we do rally hard and even move up to the 200-day EMA, it could always rollover and test the lows again.
This 3-year chart shows some support near 2600 after a couple of other support lines have already broken down. These are warning signs and we'll have to watch for the old support lines to potentially act as resistance on any bounce backs. The momentum indicator is nearing the lows made back in 2015 and 2016.
The Financials were a small bright spot yesterday as yields rallied and the XLF finished up 0.87%. It closed well off the highs like everything else, but it did hold onto gains.
The Nasdaq 100 has been getting clobbered because of the weakness in the likes of Amazon, Google, and Nvidia, the ones who led on the upside. The long positive kangaroo tail it made yesterday may be a good sign for today, but that's about all it suggests at this point.
AGG (bonds / F-fund) did fall back below that resistance line and fill the gap, as we talked about yesterday. The interest in bonds only seems to be driven by weakness in stocks, and the longer-term trend in bonds remains down.
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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The 1% loss in the Dow, and 1.6% loss in the Nasdaq were impacted by a couple of stocks that had been leading all year on the upside.
The tragic plane crash in Indonesian triggered big losses in Boeing's stock which accounted for all but about 50-points in the Dow's 245-point loss yesterday. And Amazon had another tough day impacting the tech sector and Nasdaq.
Outside of that, the S&P was down "just" 0.66% while small caps were off 0.44%. Not great days, but nothing disastrous - unless you look at those high to low declines and then it looks worse.
We said yesterday that "markets don't tend to bottom on Fridays so Monday may be another tough one at some point during the day." But it sets up one of those possible Turnaround Tuesdays again. We had one last week that was short-lived but here we are again.
We've analyzed it to death so I'll make this kind of quick since we're basically in the same boat. We have become oversold and may be due for some relief. The relief rallies have been big, but short lived. We put in a semi-decent positive reversal off the lows yesterday, but we also just witnessed a major failure at yesterday's highs.
At some point this will snap back. Will it be today, Turnaround Tuesday? Next week? Next month after the election? Our indicators suggest it could be soon, but they have been saying that for a week or more, and as we've said before, the market can go down (or up) longer than we think seems reasonable. We'll just have to let it play out.
The S&P 500 / C-fund had a wild, wide trading day. It tried to test the top of that falling wedge early, and the wedge resistance held it back. Then it fell to the bottom of the wedge, and it broke. It did manage to close back in the wedge so it's possible that was the "capitulation" although maybe just a short-term capitulation? That is, even if we do rally hard and even move up to the 200-day EMA, it could always rollover and test the lows again.
This 3-year chart shows some support near 2600 after a couple of other support lines have already broken down. These are warning signs and we'll have to watch for the old support lines to potentially act as resistance on any bounce backs. The momentum indicator is nearing the lows made back in 2015 and 2016.
The Financials were a small bright spot yesterday as yields rallied and the XLF finished up 0.87%. It closed well off the highs like everything else, but it did hold onto gains.
The Nasdaq 100 has been getting clobbered because of the weakness in the likes of Amazon, Google, and Nvidia, the ones who led on the upside. The long positive kangaroo tail it made yesterday may be a good sign for today, but that's about all it suggests at this point.
AGG (bonds / F-fund) did fall back below that resistance line and fill the gap, as we talked about yesterday. The interest in bonds only seems to be driven by weakness in stocks, and the longer-term trend in bonds remains down.
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.
