Stocks got off to a choppy start on Tuesday following some comments by Fed Chair Jerome Powell before the opening bell that didn't really shed any light on the interest rate situation. By the afternoon the bulls took back control and we saw a decent rally into the close. The Dow gained 186-points with the Nasdaq and small caps leading on the upside, while strength in the dollar held the I-fund back for a change. Bonds were down as yields rebounded from Monday's decline.
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The action was good, although trading volume was on the lighter side as we inch closer to Thursday's important CPI report, which is eagerly anticipated by investors. The bounce in stocks in early January isn't a big surprise to me but the strength of the internal breadth numbers, as well as the impressive new highs to new lows ratio, is a bit of a surprise. These look like bull market numbers, but it's probably too early to think like that.
The rebound in yields yesterday and the dollar put some pressure on the market early on, but neither move broke any trends or suggested anything but relief from the recent weakness.
While we are seeing good action to start the year, which may be a good omen for the year overall as we talked about when the year started, it doesn't mean all's clear yet. In a bear market we should be happy to take what the market gives us and until this longer-term weekly chart of the S&P 500 improves, I think we have to assume that resistance may be tough to clear.
A move up to 4000 would stay within the the bear market rally parameters and it won't be until we see a few prints of 4100 or higher before many of the bears, and there are a lot of them, might start to coming to the light side. Although that wouldn't be official unless we get a higher high, the lower high that was made in December is a start to changing this bear market trend.
Admin note: We are offering a 25% off annual subscriptions sale to TSP Talk Plus and RevShark's TSP Timing all this week. Whether you are new, or already subscriber, you can add another full year for 25% off the regular price. As I mentioned last week, Intrepid Timer's service will not be participating in the sale. The Last Look Report is already priced as low as we can go to keep it going, although it does have a 50% multi-service discount. More information
The S&P 500 (C-fund) got back Monday's losses as it retraced some of that negative reversal candlestick. There are some concerns on this chart including the overhead resistance and the bear flag which is technically still valid, but it is back above the 50-day EMA and the bulls are making a move. The question is whether they are rallying into tomorrow's CPI report and setting up a sell the news reaction?
The DWCPF (S-fund) screamed higher and actually closed above Monday's highs. Of course it did, because I sold some S-fund on Monday and they didn't want to let me keep that Monday morning gain.
The action just about filled that small open gap and if it can get above that, 1680 could be the next target. That large December 13th negative candle is still there for some retracement so it wouldn't be a surprise to see some of that tested, but with earnings season coming up in the second half of the month, nothing is completely safe on the long side.
The EFA / I-fund dipped early on Tuesday, filled in the small open gap from Monday, then moved up modestly on the day despite the rally in the dollar. There is a lot of resistance near 69 and the double top could set up a pullback. It's still a good looking chart so any moderate pullback could be an opportunity to buy lower. But if the CPI report triggers a big rally in the dollar, it could be a trend changer, so don't get too comfortable here unless and until resistance gets taken out.
BND (bonds / F-fund) was down sharply as it pulled back from the failed breakout above the 200-day moving average. That's not a surprise on this test after the big three day rally, but how it reacts from here, and whether it holds the rising support will tell us a lot more. Fundamentally it makes sense for bonds to go up if the US flirts with recessionary economic data this year.
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 weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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 action was good, although trading volume was on the lighter side as we inch closer to Thursday's important CPI report, which is eagerly anticipated by investors. The bounce in stocks in early January isn't a big surprise to me but the strength of the internal breadth numbers, as well as the impressive new highs to new lows ratio, is a bit of a surprise. These look like bull market numbers, but it's probably too early to think like that.
The rebound in yields yesterday and the dollar put some pressure on the market early on, but neither move broke any trends or suggested anything but relief from the recent weakness.
While we are seeing good action to start the year, which may be a good omen for the year overall as we talked about when the year started, it doesn't mean all's clear yet. In a bear market we should be happy to take what the market gives us and until this longer-term weekly chart of the S&P 500 improves, I think we have to assume that resistance may be tough to clear.
A move up to 4000 would stay within the the bear market rally parameters and it won't be until we see a few prints of 4100 or higher before many of the bears, and there are a lot of them, might start to coming to the light side. Although that wouldn't be official unless we get a higher high, the lower high that was made in December is a start to changing this bear market trend.
Admin note: We are offering a 25% off annual subscriptions sale to TSP Talk Plus and RevShark's TSP Timing all this week. Whether you are new, or already subscriber, you can add another full year for 25% off the regular price. As I mentioned last week, Intrepid Timer's service will not be participating in the sale. The Last Look Report is already priced as low as we can go to keep it going, although it does have a 50% multi-service discount. More information
 | 25% Off Annual Premium Subscriptions!* Ends COB Friday... Click Here For More Information * For new or current subscribers |
The S&P 500 (C-fund) got back Monday's losses as it retraced some of that negative reversal candlestick. There are some concerns on this chart including the overhead resistance and the bear flag which is technically still valid, but it is back above the 50-day EMA and the bulls are making a move. The question is whether they are rallying into tomorrow's CPI report and setting up a sell the news reaction?
The DWCPF (S-fund) screamed higher and actually closed above Monday's highs. Of course it did, because I sold some S-fund on Monday and they didn't want to let me keep that Monday morning gain.
The action just about filled that small open gap and if it can get above that, 1680 could be the next target. That large December 13th negative candle is still there for some retracement so it wouldn't be a surprise to see some of that tested, but with earnings season coming up in the second half of the month, nothing is completely safe on the long side.
The EFA / I-fund dipped early on Tuesday, filled in the small open gap from Monday, then moved up modestly on the day despite the rally in the dollar. There is a lot of resistance near 69 and the double top could set up a pullback. It's still a good looking chart so any moderate pullback could be an opportunity to buy lower. But if the CPI report triggers a big rally in the dollar, it could be a trend changer, so don't get too comfortable here unless and until resistance gets taken out.
BND (bonds / F-fund) was down sharply as it pulled back from the failed breakout above the 200-day moving average. That's not a surprise on this test after the big three day rally, but how it reacts from here, and whether it holds the rising support will tell us a lot more. Fundamentally it makes sense for bonds to go up if the US flirts with recessionary economic data this year.
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 weekly or daily notifications when we post new commentary, sign up HERE.
Thanks so much 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.
