It was a mostly bullish day, but wild day yesterday on Wall Street yesterday, mostly because it was wrapping up an interesting first quarter for stocks in 2021. The Dow ended the day down 85-points, but the broader market indices fared better and most saw modest to sharp gains. The Nasdaq and small led on the upside despite yields rallying, and that may have had to do with the discounts we saw in them with the end of quarter rebalancing completed over the last week or so.
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The end of a quarter and pre-holiday action together makes for some funky moves in the indices, and yesterday's late selling felt more like trading and positioning activity, rather than outright selling to raise cash. We've talked often about the pre-holiday reversals where the action leading up to a major holiday weekend - it's a 3-day weekend for Wall Street - can often move counter to the larger trend, then reverse back after the holiday.
This final two trading days before the Good Friday closing this year happens to come on the last day of the first quarter, and the first day of the second quarter, so there really is a lot more going on than meets the eye as money manager set up their portfolios for the next three months. Yesterday's very late sell off certainly felt forced, meaning, some money managers may have had to exit certain positions before that bell rang.
As I've said, there's always warnings signs out there and I am a little concerned. I do see a possible setup for a temporary peak, but this market has been chugging along for months now, climbing that wall of worry we talked about yesterday. New month, new direction? Maybe, but the seasonality charts suggest a good day today. Maybe a change next week?
Internally there was some weakness yesterday with higher declining volume on the NYSE than advancing, but the Nasdaq did show solid strength with almost 2 to 1 advancing over declining shares.
Friday is a market holiday but from what I'm seeing the March jobs report, which is normally scheduled on the first Friday of each month, may be released that day despite the holiday on Wall Street.
Because the market is closed on Friday, I won't be posting a market commentary.
March Madness contest links: More Info. Yahoo! Tourney Pick'em.
The S&P 500 (C-fund) tried to breakout yesterday but a late sell off pushed it back below the prior highs. It could have been end of the quarter selling pressure, but today's normally bullish pre-holiday trading day won't have any excuses if it fails, being that we are now in the new quarter. Bigger picture, the trading channel is moving from the lower left to the upper right, which is what a bull market is supposed to do. Support has been holding on pullbacks, so it's tough to argue with the bullish case. Short term however, it's been quite choppy within that channel - which I like - so there could be good buying and selling opportunities for those who don't just buy and hold.
The DWCPF (small caps / S-fund) had its second straight good day and it did break above the recent descending resistance line, although it failed at the 20-day EMA on its first attempt to get back over it. If Tuesday' low can hold, that could be a second higher low, but it will have to get above 2225 to confirm that, and there's a long way to go.
The EFA (I-Fund) was down but like the S&P 500, the 50-day EMA is holding on pullbacks and this one has a nice looking, albeit small, bull flag forming this week.
A follow up to the price of Oil shows an early rally failed at the 20-day EMA and it flipped over after OPEC and its allies lowered their 2021 demand growth forecast. The 50-day EMA is being tested as support again. Looks like a bear flag right now.
BND (bonds / F-fund) were down slightly as this chart churns below that 20-day EMA after that small bear flag breakdown.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get notifications when we post new commentary, sign up HERE.
Thanks for reading. Have a great holiday weekend, and we'll see you on Monday!
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 end of a quarter and pre-holiday action together makes for some funky moves in the indices, and yesterday's late selling felt more like trading and positioning activity, rather than outright selling to raise cash. We've talked often about the pre-holiday reversals where the action leading up to a major holiday weekend - it's a 3-day weekend for Wall Street - can often move counter to the larger trend, then reverse back after the holiday.
This final two trading days before the Good Friday closing this year happens to come on the last day of the first quarter, and the first day of the second quarter, so there really is a lot more going on than meets the eye as money manager set up their portfolios for the next three months. Yesterday's very late sell off certainly felt forced, meaning, some money managers may have had to exit certain positions before that bell rang.
As I've said, there's always warnings signs out there and I am a little concerned. I do see a possible setup for a temporary peak, but this market has been chugging along for months now, climbing that wall of worry we talked about yesterday. New month, new direction? Maybe, but the seasonality charts suggest a good day today. Maybe a change next week?
Internally there was some weakness yesterday with higher declining volume on the NYSE than advancing, but the Nasdaq did show solid strength with almost 2 to 1 advancing over declining shares.
Friday is a market holiday but from what I'm seeing the March jobs report, which is normally scheduled on the first Friday of each month, may be released that day despite the holiday on Wall Street.
Because the market is closed on Friday, I won't be posting a market commentary.
March Madness contest links: More Info. Yahoo! Tourney Pick'em.
The S&P 500 (C-fund) tried to breakout yesterday but a late sell off pushed it back below the prior highs. It could have been end of the quarter selling pressure, but today's normally bullish pre-holiday trading day won't have any excuses if it fails, being that we are now in the new quarter. Bigger picture, the trading channel is moving from the lower left to the upper right, which is what a bull market is supposed to do. Support has been holding on pullbacks, so it's tough to argue with the bullish case. Short term however, it's been quite choppy within that channel - which I like - so there could be good buying and selling opportunities for those who don't just buy and hold.
The DWCPF (small caps / S-fund) had its second straight good day and it did break above the recent descending resistance line, although it failed at the 20-day EMA on its first attempt to get back over it. If Tuesday' low can hold, that could be a second higher low, but it will have to get above 2225 to confirm that, and there's a long way to go.
The EFA (I-Fund) was down but like the S&P 500, the 50-day EMA is holding on pullbacks and this one has a nice looking, albeit small, bull flag forming this week.
A follow up to the price of Oil shows an early rally failed at the 20-day EMA and it flipped over after OPEC and its allies lowered their 2021 demand growth forecast. The 50-day EMA is being tested as support again. Looks like a bear flag right now.
BND (bonds / F-fund) were down slightly as this chart churns below that 20-day EMA after that small bear flag breakdown.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
To get notifications when we post new commentary, sign up HERE.
Thanks for reading. Have a great holiday weekend, and we'll see you on Monday!
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.
