Stocks gapped open on the upside on Monday morning after news of a trade deal was reached with Canada. As we might expect, large caps celebrated the trade news and the Dow gained 193-points on the day. Unfortunately, not all of the market indices were applauding and we saw some selling in the Nasdaq, which closed down on the day, while small caps took a beating so their recent underperformance continued.
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We were anticipating some kind of gap opening as mentioned in Monday's commentary, since September ended on the quiet side and it felt like something was building up. I just didn't know what that something was so I didn't know if the gap would be to the upside or the downside.
Clearly it was to the upside, but as we've some to expect from emotion gap openings, there tends to be some backing and filling, and we did see some of that yesterday although the large cap indices did finish with solid gains. A late pop up into the close saved the S&P from almost moving into negative territory for the day.
A new month and a new quarter tends to bring in new inflows of cash from pensions, 401K's, etc., which is one of the reasons why the seasonality charts are usually positive for the first couple of days of a month, and October was no different this year. This month does have a positive seasonal bias for the first two trading days in October, but that's about all we might expect.
We get the September Jobs Report on Friday morning and estimates are looking for a gain of about 185,000 jobs and an unemployment rate of 3.8%
The S&P 500 / C-fund opened sharply higher on Monday, gapping up, but as the day wore on the gap was filed and it ended up closing just about in the middle of its range at +0.36%. The rising support like has held yet again. New highs are a stone's throw away but can it make new highs if the rest of the market isn't necessarily coming along for the ride?
The small caps (S-fund) opened sharply higher with the rest of the market but sellers stepped up and took them down hard all the way into the close. That created a negative outside reversal day, and also broke the rising support line.
The Nasdaq also opened higher but faded and closed just into negative territory. It remains in that elongated bearish looking flag formation.
The EAFE Index closed slightly lower as the dollar was up again. Technically it remains below the 200-day EMA but we'll see if the upside can resume now that it filled that open gap near the top of the old resistance.
The price of oil has been rising again and it took out July's highs intraday yesterday, but it's possible that we'll see a double top pullback.
Here' some interesting data regarding the Presidential Cycle. September, in year two of a presidential Cycle, has a very bad record, one of the worst months in the cycle. We got a taste of that last month. The good news for the bulls is October, as well as the following four months, has a very strong record. The percentages are obviously average returns for the months in question.
Chart source: www.seeitmarket.com/presidential-cycle-warns-september-stock-market-weakness-18400/
The AGG (bonds) was down yesterday as it stalled at the 50 and 200-day EMAs and the descending resistance line.
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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We were anticipating some kind of gap opening as mentioned in Monday's commentary, since September ended on the quiet side and it felt like something was building up. I just didn't know what that something was so I didn't know if the gap would be to the upside or the downside.
Clearly it was to the upside, but as we've some to expect from emotion gap openings, there tends to be some backing and filling, and we did see some of that yesterday although the large cap indices did finish with solid gains. A late pop up into the close saved the S&P from almost moving into negative territory for the day.
A new month and a new quarter tends to bring in new inflows of cash from pensions, 401K's, etc., which is one of the reasons why the seasonality charts are usually positive for the first couple of days of a month, and October was no different this year. This month does have a positive seasonal bias for the first two trading days in October, but that's about all we might expect.
We get the September Jobs Report on Friday morning and estimates are looking for a gain of about 185,000 jobs and an unemployment rate of 3.8%
The S&P 500 / C-fund opened sharply higher on Monday, gapping up, but as the day wore on the gap was filed and it ended up closing just about in the middle of its range at +0.36%. The rising support like has held yet again. New highs are a stone's throw away but can it make new highs if the rest of the market isn't necessarily coming along for the ride?
The small caps (S-fund) opened sharply higher with the rest of the market but sellers stepped up and took them down hard all the way into the close. That created a negative outside reversal day, and also broke the rising support line.
The Nasdaq also opened higher but faded and closed just into negative territory. It remains in that elongated bearish looking flag formation.
The EAFE Index closed slightly lower as the dollar was up again. Technically it remains below the 200-day EMA but we'll see if the upside can resume now that it filled that open gap near the top of the old resistance.
The price of oil has been rising again and it took out July's highs intraday yesterday, but it's possible that we'll see a double top pullback.
Here' some interesting data regarding the Presidential Cycle. September, in year two of a presidential Cycle, has a very bad record, one of the worst months in the cycle. We got a taste of that last month. The good news for the bulls is October, as well as the following four months, has a very strong record. The percentages are obviously average returns for the months in question.
Chart source: www.seeitmarket.com/presidential-cycle-warns-september-stock-market-weakness-18400/
The AGG (bonds) was down yesterday as it stalled at the 50 and 200-day EMAs and the descending resistance line.
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.
