Stocks opened lower on Thursday, and in the case of the larger cap indices, got a little stronger as the day wore on after a weaker than expected weekly jobless claims report. The Dow, S&P, and Nasdaq all ended the day with modest gains, but those small caps flipped back over and posted a moderate loss. Bonds rallied as yields fell again. The dollar rallied back from an early sell off to hold off the I-fund a bit. Oil was up big for a second straight day.
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After the bell the futures were moving higher after a series of encouraging earnings reports. If you've been investing for some time it may surprise you that Intel, one of the bellwether companies for years that the market followed extremely closely, fell in after hours trading after a disappointing report, yet SNAP and Twitter were up after strong reports, and those two where the ones that were pushing the futures higher, not Intel pushing them lower.
I suppose it translated into potential good things for FAANG stocks like Facebook and Google when they report later this month. So rather than an economy that hinges on a physical commodity like semiconductors, it's triggered off of ad revenue from people posting photos and memes on their phones. Times they are a changing.
The small caps took another hit after the big two-day rebound. As we talked about, it is not unusual for the Russell 2000 (and S-fund index DWCPF) to pullback after a spike higher, and in the past we've seen the pullbacks last 2 - 3 days so we'll see if that is that case again this time. But even the double dips have led to lows and continued moves higher as the small caps remain in that wide trading range in 2021, not making much progress in either direction, and it will break above or below that range at some point.
Internally yesterday, things weren't all that good. Despite green closes on the three major indices, the decliners easily outpaced the advancers in both issues and trading volume.
Let's get into those boring yields, which fell again on Thursday after stalling at the top of that open gap, which is now filled. Tuesday felt like a solid low for yields but the fact that it failed for a second day at 1.3% after filling that open gap, is a possible warning sign. I'd say it's close to now or never for those yields. Perhaps it was the weekly jobless claims that held it back an extra day?
The dollar was down sharply at the opening bell after the weak jobless claims number which came in a lot higher than expected. They were expecting 360K new claims, but got 419K. Why the dollar rebounded and closed back in that rising wedge pattern, I don't know. Especially when yields closed lower.
Bottom line, the action looks like a typical 2021 pullback and so far buying each one of those pullbacks has paid off. One day it won't be the right move, and for the small caps I think we should know in a day or two because if we see one more big down day that doesn't get bought, then they could be in trouble. I'll give them today and Monday to reverse back up or I think it could be the sign of a topping action.
The S&P 500 (C-fund) tacked on a small gain onto the big two day rally after another successful test of the 50-day EMA. It looks so easy in the aftermath, but while those charts are tanking, emotion takes over. Now it's a stone's throw away from another new high. The overall problem is, not all of the charts are in agreement as the Transports and small caps are still struggling.
The DWCPF (S-fund) rolled over again after its big rally off the rising support line this week. Those rallies were huge so a little pullback isn't a bad thing, and it did hold at the 50-day EMA, but it has to hold or we could see another attempt at testing that support line, or at least the 2160 area based on prior pullbacks.
The EFA / I-fund was up slightly but the wild swinging dollar didn't make it easy. It closed below the 50-day EMA. That is still a bear flag but technically I believe it came close to already hitting the flag's downside target. There's large open gaps above and below so we'll just have to see which has more pull, and if one gets filled, will it act as a turning point?
The Dow Transportation Index was down again despite some good earnings from that sector. It closed above the 100-day EMA again, but just barely. I think if the market in general is going to move toward new highs, this index needs to get on its horse. 14,600 looks like key support right now.
The BND (bonds / F-fund) rallied again, but only enough to fill in that open gap from Wednesday. This looks toppy, but there is also support at the top of that trading channel that could hold and keep things interesting for the F-fund.
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... [url]www.tsptalk.com/premiums.html
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Thanks for reading. Have a great weekend!
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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After the bell the futures were moving higher after a series of encouraging earnings reports. If you've been investing for some time it may surprise you that Intel, one of the bellwether companies for years that the market followed extremely closely, fell in after hours trading after a disappointing report, yet SNAP and Twitter were up after strong reports, and those two where the ones that were pushing the futures higher, not Intel pushing them lower.
I suppose it translated into potential good things for FAANG stocks like Facebook and Google when they report later this month. So rather than an economy that hinges on a physical commodity like semiconductors, it's triggered off of ad revenue from people posting photos and memes on their phones. Times they are a changing.
The small caps took another hit after the big two-day rebound. As we talked about, it is not unusual for the Russell 2000 (and S-fund index DWCPF) to pullback after a spike higher, and in the past we've seen the pullbacks last 2 - 3 days so we'll see if that is that case again this time. But even the double dips have led to lows and continued moves higher as the small caps remain in that wide trading range in 2021, not making much progress in either direction, and it will break above or below that range at some point.
Internally yesterday, things weren't all that good. Despite green closes on the three major indices, the decliners easily outpaced the advancers in both issues and trading volume.
Let's get into those boring yields, which fell again on Thursday after stalling at the top of that open gap, which is now filled. Tuesday felt like a solid low for yields but the fact that it failed for a second day at 1.3% after filling that open gap, is a possible warning sign. I'd say it's close to now or never for those yields. Perhaps it was the weekly jobless claims that held it back an extra day?
The dollar was down sharply at the opening bell after the weak jobless claims number which came in a lot higher than expected. They were expecting 360K new claims, but got 419K. Why the dollar rebounded and closed back in that rising wedge pattern, I don't know. Especially when yields closed lower.
Bottom line, the action looks like a typical 2021 pullback and so far buying each one of those pullbacks has paid off. One day it won't be the right move, and for the small caps I think we should know in a day or two because if we see one more big down day that doesn't get bought, then they could be in trouble. I'll give them today and Monday to reverse back up or I think it could be the sign of a topping action.
The S&P 500 (C-fund) tacked on a small gain onto the big two day rally after another successful test of the 50-day EMA. It looks so easy in the aftermath, but while those charts are tanking, emotion takes over. Now it's a stone's throw away from another new high. The overall problem is, not all of the charts are in agreement as the Transports and small caps are still struggling.
The DWCPF (S-fund) rolled over again after its big rally off the rising support line this week. Those rallies were huge so a little pullback isn't a bad thing, and it did hold at the 50-day EMA, but it has to hold or we could see another attempt at testing that support line, or at least the 2160 area based on prior pullbacks.
The EFA / I-fund was up slightly but the wild swinging dollar didn't make it easy. It closed below the 50-day EMA. That is still a bear flag but technically I believe it came close to already hitting the flag's downside target. There's large open gaps above and below so we'll just have to see which has more pull, and if one gets filled, will it act as a turning point?
The Dow Transportation Index was down again despite some good earnings from that sector. It closed above the 100-day EMA again, but just barely. I think if the market in general is going to move toward new highs, this index needs to get on its horse. 14,600 looks like key support right now.
The BND (bonds / F-fund) rallied again, but only enough to fill in that open gap from Wednesday. This looks toppy, but there is also support at the top of that trading channel that could hold and keep things interesting for the F-fund.
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... [url]www.tsptalk.com/premiums.html
[/URL]
To get weekly or daily notifications when we post new commentary, sign up HERE.
Thanks for reading. Have a great weekend!
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.
