]Stocks opened higher on Wednesday and gained momentum throughout the day. It was more of a Bizarro day with the normal winners lagging and the broader market pressing higher. The Dow gained a whopping 455-points, and that was with Apple having a rare bad day. The Nasdaq and small caps were lagging and negative for much of the morning before everything turned higher in the afternoon.
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here was talk out of the CDC of the possible release of a vaccine by November 1, and that seems to part of the catalyst yesterday. We know momentum has been on the upside and the added optimism may be putting the icing on the cake of this rally.
Apple was down, as was Tesla, another recent market darling, Zoom, Netflix, and other "stay at home" stocks, because of the vaccine news. Bond yields, oil, gold, lumber, copper - all down. A lot of the decline in commodities had to do with the rally in the dollar.
The VIX (Volatility Index), of all things, was up, normally associated with a down day for stock. Yet we saw what happened to stocks yesterday and it was quite impressive, and broad. The VIX has been climbing and that's another worry for the market, as investors seems to be preparing for volatility in September.
Trading volume wasn't all that high, but it was higher than a typical pre-holiday trading day, and it felt like there was some chasing into some of the areas that haven't been exploding as much as the large tech companies have. But again, as we get into the middle of next week we could see where this market wants to go next when vacations wrap up and money managers are back in full force. They may keep the rally going, or they may start pulling the plug and taking profits. The profit taking seems more likely, but just writing that reminds me that the market hasn't been doing the obvious in recent months.
When will the bubble pop? Probably when we least expect it.
Keeping it brief this week...
The S&P 500 (C-fund) took it into another gear yesterday as it jumped 1.54%, but now by basically every measure, it is overbought and extended. Momentum is not an easy thing to stop, but we have to be careful at these levels - especially next week when those money manager come back. If they are going to sell, we probably don't want to do it after they do. Of course that's IF they sell. With the vaccine and stimulus still hanging over the market, there's certainly no guarantees anyone will be selling.
The DWCPF (S-fund) was actually down sharply in the morning and it used a lot of energy to get that 0.50% gain, having to come back from an early drop below 1600 to close at another new high. That is a positive outside reversal day and that generally means another push to new highs again today at some point, but it doesn't have to close there.
The Dow Transportation Index added onto Tuesday's gains yesterday and it looks like that one day dip was another one and done for the bears.
The EFA (I-fund) had a big day despite a rally in the dollar, and it actually finally moved above the prior highs.
UUP (the dollar) gapped up on Wednesday and closed with a solid gain of 0.36%. That put a lot of pressure on commodities, but the stock market ignored it and rallied anyway.
The Equal Weighted S&P 500 Index ETF pushed convincingly above the prior highs, and the 1.78% gain outpaced the S&P 500 for a change, with some of those large tech stocks taking a day off from rallying.
BND (F-fund) had another good day, this time a weaker than expected ADP economic report was the catalyst, as it sent yields down and bond prices higher. It easily took out some resistance and once again the bond market has my number because I never seem to be on the same page as this F-fund. It seems to zig when I expect a zag.
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
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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here was talk out of the CDC of the possible release of a vaccine by November 1, and that seems to part of the catalyst yesterday. We know momentum has been on the upside and the added optimism may be putting the icing on the cake of this rally.
Apple was down, as was Tesla, another recent market darling, Zoom, Netflix, and other "stay at home" stocks, because of the vaccine news. Bond yields, oil, gold, lumber, copper - all down. A lot of the decline in commodities had to do with the rally in the dollar.
The VIX (Volatility Index), of all things, was up, normally associated with a down day for stock. Yet we saw what happened to stocks yesterday and it was quite impressive, and broad. The VIX has been climbing and that's another worry for the market, as investors seems to be preparing for volatility in September.
Trading volume wasn't all that high, but it was higher than a typical pre-holiday trading day, and it felt like there was some chasing into some of the areas that haven't been exploding as much as the large tech companies have. But again, as we get into the middle of next week we could see where this market wants to go next when vacations wrap up and money managers are back in full force. They may keep the rally going, or they may start pulling the plug and taking profits. The profit taking seems more likely, but just writing that reminds me that the market hasn't been doing the obvious in recent months.
When will the bubble pop? Probably when we least expect it.
Keeping it brief this week...
The S&P 500 (C-fund) took it into another gear yesterday as it jumped 1.54%, but now by basically every measure, it is overbought and extended. Momentum is not an easy thing to stop, but we have to be careful at these levels - especially next week when those money manager come back. If they are going to sell, we probably don't want to do it after they do. Of course that's IF they sell. With the vaccine and stimulus still hanging over the market, there's certainly no guarantees anyone will be selling.
The DWCPF (S-fund) was actually down sharply in the morning and it used a lot of energy to get that 0.50% gain, having to come back from an early drop below 1600 to close at another new high. That is a positive outside reversal day and that generally means another push to new highs again today at some point, but it doesn't have to close there.
The Dow Transportation Index added onto Tuesday's gains yesterday and it looks like that one day dip was another one and done for the bears.
The EFA (I-fund) had a big day despite a rally in the dollar, and it actually finally moved above the prior highs.
UUP (the dollar) gapped up on Wednesday and closed with a solid gain of 0.36%. That put a lot of pressure on commodities, but the stock market ignored it and rallied anyway.
The Equal Weighted S&P 500 Index ETF pushed convincingly above the prior highs, and the 1.78% gain outpaced the S&P 500 for a change, with some of those large tech stocks taking a day off from rallying.
BND (F-fund) had another good day, this time a weaker than expected ADP economic report was the catalyst, as it sent yields down and bond prices higher. It easily took out some resistance and once again the bond market has my number because I never seem to be on the same page as this F-fund. It seems to zig when I expect a zag.
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
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.
