To V, or not to V? Stocks followed through on Monday to Friday's positive reversal as the S&P 500 opened flat, rallied early but drifted lower most of the morning before bouncing back again later in the afternoon. If there was a red flag it was that the S&P 500 hit its 200-day EMA during that afternoon rally, stalled there and pulled back to close off the highs, but still posted solid gains. Trading volume was on the light side again so there wasn't a lot of conviction, but who is it that is being tentative - the smart money, or dumb?
The S&P 500 (C-fund) has now bounced 3.6% from Thursday's low to yesterday's high at that 200-day average. The key was to get above those levels, but it will usually stall on the first attempt, so with the two-day Fed meeting starting today, can the chart best that resistance area before we get the new policy statement and comments from Jerome Powell? That would be impressive, but Powell also has the power to swat it back down. For now, the "V" bottom possibility is still alive.
Internally it was another very bullish day with advancing issues and trading volume easily outpacing the decliners. We even saw more new 52-week highs on the NYSE than new lows yesterday.
The beleaguered market leading Dow Transportation Index rallied for a second day and you can see that it remains in a descending channel, but there is a lot of room above that resistance if it can break back toward 15,000.
There are two weeks remaining until those April 2 tariffs kick in. Is that a "D" day or has the market priced it all in, i.e., sell the rumor, buy the news? There's a lot going on and plenty of changes for market analysts and business leaders to deal with as they scrambling to price it all in. I'm just looking at the charts for clues. The S&P chart shows the imminent resistance that it has to deal with, and that could be a road block, otherwise if it can surpass the resistance, there's a pretty clear path up to the next level of resistance.
Ready for our annual March Madness Contest? More info! Deadline to enter is the start of Thursday's first game.
DWCPF (S-fund) has led the rebound both on Friday and Monday making an argument for a possible "V" bottom. We see the resistance near about 2145 and 2200. So far so good, but not out of the woods yet.
ACWX (the I-fund tracking index) blasted right through the resistance of that bearish diamond formation that I mentioned yesterday. I have to look at that as a sign of strength as it made yet another new high for the year. Not bad considering the damage done to US stocks. There is an open gap down below 56, but gaps are common on this ETF as the markets within it trade overnight.
BND (F-fund) has been pulling back and the question I have had is whether it is peaking, or consolidating? I think both are still possibilities. Maybe we should give the edge to the bond bulls since we've seen this pattern already this year and the bulls came out on top.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
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I was a little surprised that stocks didn't gap up at the open after Friday's rally into the close, but it just took a few moments to get the buyers back onboard. Had the S&P 500 opened higher near 5665 where it was by 9:45 AM ET, then it pulled back to fill the gap, it would have looked better, but it worked out for the bulls - all except for that late push lower after the index hit its 200-day EMA, which is now at 5704. Yesterday's high? 5704 (act. 5703.52.).
The S&P 500 (C-fund) has now bounced 3.6% from Thursday's low to yesterday's high at that 200-day average. The key was to get above those levels, but it will usually stall on the first attempt, so with the two-day Fed meeting starting today, can the chart best that resistance area before we get the new policy statement and comments from Jerome Powell? That would be impressive, but Powell also has the power to swat it back down. For now, the "V" bottom possibility is still alive.
Internally it was another very bullish day with advancing issues and trading volume easily outpacing the decliners. We even saw more new 52-week highs on the NYSE than new lows yesterday.
The beleaguered market leading Dow Transportation Index rallied for a second day and you can see that it remains in a descending channel, but there is a lot of room above that resistance if it can break back toward 15,000.
There are two weeks remaining until those April 2 tariffs kick in. Is that a "D" day or has the market priced it all in, i.e., sell the rumor, buy the news? There's a lot going on and plenty of changes for market analysts and business leaders to deal with as they scrambling to price it all in. I'm just looking at the charts for clues. The S&P chart shows the imminent resistance that it has to deal with, and that could be a road block, otherwise if it can surpass the resistance, there's a pretty clear path up to the next level of resistance.
Ready for our annual March Madness Contest? More info! Deadline to enter is the start of Thursday's first game.
DWCPF (S-fund) has led the rebound both on Friday and Monday making an argument for a possible "V" bottom. We see the resistance near about 2145 and 2200. So far so good, but not out of the woods yet.
ACWX (the I-fund tracking index) blasted right through the resistance of that bearish diamond formation that I mentioned yesterday. I have to look at that as a sign of strength as it made yet another new high for the year. Not bad considering the damage done to US stocks. There is an open gap down below 56, but gaps are common on this ETF as the markets within it trade overnight.
BND (F-fund) has been pulling back and the question I have had is whether it is peaking, or consolidating? I think both are still possibilities. Maybe we should give the edge to the bond bulls since we've seen this pattern already this year and the bulls came out on top.
Thanks so much for reading! We'll see you back here tomorrow.
Tom Crowley
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
Questions, comments, or issues with today's commentary? We can discuss it in the Forum.
Daily Market Commentary Archives
For more info our other premium services, please go here... www.tsptalk.com/premiums.php
To get weekly or daily notifications when we post new commentary, sign up HERE.
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 may use additional methods and strategies to determine fund positions.
