Stocks got off to a lackluster start on Thursday but the dip buyers did show up and a late surge into the close gave the Dow a gain of over 400-points, and the S&P 500 was lifted to a new all-time high. Tech stocks lagged a bit, and despite a rally in longer-term Treasury Yields, the small caps also did well, although they did lag the S&P. The I-fund even had an impressive gain as that charts continues to try to improve.
You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
Market breadth was positive, and just OK - about 4 stocks up for every 3 that was down, although share volume breadth was quite strong with advancing volume more than two times that of declining volume on the NYSE yesterday.
The trading volume was a little light so this market is climbing the preverbal wall of worry as opposed to being bombarded with money from every angle. Frankly it looks a little dangerous, but those seem to be the kinds of markets that keep grinding higher and frustrate the underinvested.
That said, as we look at the charts there are still some cracks with yields still rising, while others like the chart of the S&P 500 (C-fund) and the I-fund continue to improve. Is this latest move running on fumes, because most of the indices charts are sitting above at least one or two vulnerable open gaps that have the bulls worried and looking over their shoulders.
Shorter term Treasury yields were flat to slightly lower yesterday while the longer term yields were up. This steepened the 2/10 yield curve. The 10-year Treasury Yield has stopped pulling back and it looks like a case of the pre-holiday reversal reversing back up with the larger positive trend that we had before the holiday weeks.
BlackRock’s Fink sees potential risks and said on CNBC that the bond market will tell us where we are going. He also warned that there is a possibility that the 10-year Treasury yield could retest the 5% level and even reach 5.5% if inflation re-accelerates in a meaningful way. If that happens, Fink said it would “shock” the equity market.
The move higher in yields is putting more pressure onBND (bonds / F-fund), however it was able to close off its lows yesterday, with the help of its 200-day EMA that held as support. The open gap near 71.25 is still there for the taking, so the 200-day EMA must remain strong to keep this from moving toward the lows. The overhead 50-day EMA is the current resistance and you can see there is more resistance above, as the trading channel remains quite negative but there is some room in between.
The Dow Transportation Index was up and participated in the rally, as did the Russell 2000, but again it was a rather slow, lightly traded day in front of next week's busy schedule.
Again, next week will be catalyst driven with the FOMC meeting on Wednesday, the PCE inflation data on Friday, and 6 of the Magnificent 7 stocks reporting earnings throughout the week.
The S&P 500 (C-fund) made a new all time high yesterday and a chart that starts in the lower left hand corner and ends in the top right is not one that is in trouble, but as speculators who only get 2 IFT's a month, we also have to try to be predictive of future action. Is this sustainable or should we be worried about that open gaps that are stacking up below? The light volume tells us that it wasn't the big money acting yesterday, but they weren't selling the new highs either.
DWCPF (S-fund) opened sharply lower but improved as the day wore on. It seems to be finding support at the top of that old "bear flag" which didn't act much like a bear flag. So many open gaps to lure it lower, but there can also be a lure toward the prior highs like we saw in the S&P 500 abobe. It's stalling at the early November peak so this could also be trying to form a right shoulder in a head and shoulders pattern.
ACWX (the I-fund tracking index) was up 0.62% yesterday and the I-fund was given a gain of 0.40%. That was a little payback from Wednesday's overpricing above ACWX. That's a move slightly above resistance, although too close, and too early to call it a breakout.
Thanks so much for reading! Have a great weekend!
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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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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You can see the latest updated TSP share prices and returns, usually posted daily by 8:30 PM ET here: https://www.tsptalk.com/tsp_share_prices.php
Market breadth was positive, and just OK - about 4 stocks up for every 3 that was down, although share volume breadth was quite strong with advancing volume more than two times that of declining volume on the NYSE yesterday.
The trading volume was a little light so this market is climbing the preverbal wall of worry as opposed to being bombarded with money from every angle. Frankly it looks a little dangerous, but those seem to be the kinds of markets that keep grinding higher and frustrate the underinvested.
That said, as we look at the charts there are still some cracks with yields still rising, while others like the chart of the S&P 500 (C-fund) and the I-fund continue to improve. Is this latest move running on fumes, because most of the indices charts are sitting above at least one or two vulnerable open gaps that have the bulls worried and looking over their shoulders.
Shorter term Treasury yields were flat to slightly lower yesterday while the longer term yields were up. This steepened the 2/10 yield curve. The 10-year Treasury Yield has stopped pulling back and it looks like a case of the pre-holiday reversal reversing back up with the larger positive trend that we had before the holiday weeks.
BlackRock’s Fink sees potential risks and said on CNBC that the bond market will tell us where we are going. He also warned that there is a possibility that the 10-year Treasury yield could retest the 5% level and even reach 5.5% if inflation re-accelerates in a meaningful way. If that happens, Fink said it would “shock” the equity market.
The move higher in yields is putting more pressure onBND (bonds / F-fund), however it was able to close off its lows yesterday, with the help of its 200-day EMA that held as support. The open gap near 71.25 is still there for the taking, so the 200-day EMA must remain strong to keep this from moving toward the lows. The overhead 50-day EMA is the current resistance and you can see there is more resistance above, as the trading channel remains quite negative but there is some room in between.
The Dow Transportation Index was up and participated in the rally, as did the Russell 2000, but again it was a rather slow, lightly traded day in front of next week's busy schedule.
Again, next week will be catalyst driven with the FOMC meeting on Wednesday, the PCE inflation data on Friday, and 6 of the Magnificent 7 stocks reporting earnings throughout the week.
The S&P 500 (C-fund) made a new all time high yesterday and a chart that starts in the lower left hand corner and ends in the top right is not one that is in trouble, but as speculators who only get 2 IFT's a month, we also have to try to be predictive of future action. Is this sustainable or should we be worried about that open gaps that are stacking up below? The light volume tells us that it wasn't the big money acting yesterday, but they weren't selling the new highs either.
DWCPF (S-fund) opened sharply lower but improved as the day wore on. It seems to be finding support at the top of that old "bear flag" which didn't act much like a bear flag. So many open gaps to lure it lower, but there can also be a lure toward the prior highs like we saw in the S&P 500 abobe. It's stalling at the early November peak so this could also be trying to form a right shoulder in a head and shoulders pattern.
ACWX (the I-fund tracking index) was up 0.62% yesterday and the I-fund was given a gain of 0.40%. That was a little payback from Wednesday's overpricing above ACWX. That's a move slightly above resistance, although too close, and too early to call it a breakout.
Thanks so much for reading! Have a great weekend!
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 use additional methods and strategies to determine fund positions.
