Despite a weak open on Friday, stocks rallied again as the Dow led way with a 127-point (+0.8%) gain. The broader indices did not do quite as well, but they all tacked on modest gains. Bonds were down slightly.
[TABLE="width: 79%, align: center"]
[TR]
[TD="width: 300"]
[TD="align: center"] Daily TSP Funds Return
[TR]
[TD="align: right"] [/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The SPY (S&P 500) filled its open gap on Friday, and that took 17 trading days from the day it was opened. The old December and January highs are next to be tested. The question of course, is whether the recent 7 day rally took anything out of the market, in which case it would need a rest, or if it will blast through to new highs with this recent momentum?
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Dow is still lagging and is still quite a bit off its late December high.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
It has just moved above its late November high, which is a must if we are finally going to stop looking at this next chart.
While the S&P 500 is far past the right shoulder (RS) of a head and shoulders pattern, the Dow is just now testing the height of the left shoulder (LS). If the Dow can do what the S&P has done, we can probably feel better about this chart falling apart, although last week we started to dismiss it because of the wide-spread attention it had started to get.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
The Nasdaq 100, the largest technology companies in the Nasdaq, made a third consecutive multi-year new high on Friday. This market leader is doing a fine job leading the bull market.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Unfortunately this leader (Russell 2000) has been lagging and it looks more like the chart of the Dow and needs some help to keep the rally going. It has been up for 7 straight days so we should get a good test of the market strength early this week. We'll see what kind of pressure, if any, the bears can put on this overbought lagging index.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Bonds were down slightly as these ETFs continue to dance along the 200-day EMA support lines.
Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk
Will the 200-day EMAs hold and put an end to the recent pullback in bonds? It would seem likely that if stocks continued to rally, bonds would continue to back off. Or, have bonds found support here which would possibly put pressure on the current rally in stocks?
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
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.
