Stocks were choppy on Monday but the large caps held onto solid gains despite closing well off their highs. AI news pushed big tech higher, which led and took the Nasdaq and S&P 500 with it. Investors alternate between buying large and small cap stocks, as the small caps lagged yesterday with yields continuing to rally. Higher yields also hurt the F-fund, and the I-fund was flat as the dollar moved higher.
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If I take anything away from yesterday rally it was that the AI story is alive and well, and each rally ignites FOMO for those not fully invested in stocks like Nvidia, and yesterday it was Apple and Alphabet that were bit by the AI bug as they collaborate on a Gemini project.
But the rally faded as the opening gap was trying to get filled, and the small caps did not participate as the inflationary concerns pushed yields higher again, but we actually saw decent breadth in the market despite the selling in the broader small caps issues. And ironically, it was the Nasdaq that saw more stocks down than up, and more new lows than new highs, despite the 0.82% rally in that index. I see the internal strength in the NYSE as a positive for the small caps but I just don't know if they can sustain a rally if the Nasdaq or S&P start to falter.
The 10-year Treasury Yield closed at its highest level since November but it is hitting a possible short-term double top in this 4.35% area. I mentioned the inverted head and shoulders pattern and the rising trading channel yesterday, so there is a good case for yields continuing to move higher, but in the short term we could see some backing and filling to create a right shoulder. The Fed may hasten any breakout or pullback after their FOMC meeting on Wednesday.
The dollar was up and may test some overhead resistance today. The I-fund's return had been leading the TSP funds in March but it may need that resistance on UUP to hold in order to keep that lead.
The Dow Transportation Index is flirting with another layer of support after failing at a couple of other support levels on Friday. The strength or weakness in this chart may be telling for the strength of the economy, so the bulls should be pulling for this to hold at 15,400.
Again, there is an FOMC meeting this week and a decision on interest rates will be released on Wednesday afternoon. No one is expecting a rate cut at this meeting, but clues to when the move in rates will be will move the market.
Admin Note: Ready for our Annual March Madness Contest? It's free and there's prizes! The deadline to join is Thursday when they tip off the first game. More info
The S&P 500 (C-fund) gapped up on Monday and held onto some decent gains despite closing well off its morning highs. That small open gap between about 5117 and 5137 is vulnerable to a fill this week. The 15-day EMA is doing a good job of holding as support, but that large open gap near 4980 continues to loom. The PMO indicator's negative divergence is concerning.
DWCPF (S-fund) pulled back but remained above Friday's lows and the 30-day EMA which continues to hold as support. Overhead resistance is falling off the negative reversal high.
EFA (I-fund) broke below its trading channel lest week but since then it has been forming a pennant or flag-like formation that would tend to be bullish, but it really needed a rest after the move from 74 to 80, or 8%, in about a month.
BND (Bonds / F-fund) drifted lower again as yields grind higher. But as I mentioned above, the 10-year yield may be hitting some resistance so perhaps we'll see a little relief rally here this week?
Thanks so much for reading! We'll see you back here tomorrow.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
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If I take anything away from yesterday rally it was that the AI story is alive and well, and each rally ignites FOMO for those not fully invested in stocks like Nvidia, and yesterday it was Apple and Alphabet that were bit by the AI bug as they collaborate on a Gemini project.
But the rally faded as the opening gap was trying to get filled, and the small caps did not participate as the inflationary concerns pushed yields higher again, but we actually saw decent breadth in the market despite the selling in the broader small caps issues. And ironically, it was the Nasdaq that saw more stocks down than up, and more new lows than new highs, despite the 0.82% rally in that index. I see the internal strength in the NYSE as a positive for the small caps but I just don't know if they can sustain a rally if the Nasdaq or S&P start to falter.
The 10-year Treasury Yield closed at its highest level since November but it is hitting a possible short-term double top in this 4.35% area. I mentioned the inverted head and shoulders pattern and the rising trading channel yesterday, so there is a good case for yields continuing to move higher, but in the short term we could see some backing and filling to create a right shoulder. The Fed may hasten any breakout or pullback after their FOMC meeting on Wednesday.
The dollar was up and may test some overhead resistance today. The I-fund's return had been leading the TSP funds in March but it may need that resistance on UUP to hold in order to keep that lead.
The Dow Transportation Index is flirting with another layer of support after failing at a couple of other support levels on Friday. The strength or weakness in this chart may be telling for the strength of the economy, so the bulls should be pulling for this to hold at 15,400.
Again, there is an FOMC meeting this week and a decision on interest rates will be released on Wednesday afternoon. No one is expecting a rate cut at this meeting, but clues to when the move in rates will be will move the market.
Admin Note: Ready for our Annual March Madness Contest? It's free and there's prizes! The deadline to join is Thursday when they tip off the first game. More info
The S&P 500 (C-fund) gapped up on Monday and held onto some decent gains despite closing well off its morning highs. That small open gap between about 5117 and 5137 is vulnerable to a fill this week. The 15-day EMA is doing a good job of holding as support, but that large open gap near 4980 continues to loom. The PMO indicator's negative divergence is concerning.
DWCPF (S-fund) pulled back but remained above Friday's lows and the 30-day EMA which continues to hold as support. Overhead resistance is falling off the negative reversal high.
EFA (I-fund) broke below its trading channel lest week but since then it has been forming a pennant or flag-like formation that would tend to be bullish, but it really needed a rest after the move from 74 to 80, or 8%, in about a month.
BND (Bonds / F-fund) drifted lower again as yields grind higher. But as I mentioned above, the 10-year yield may be hitting some resistance so perhaps we'll see a little relief rally here this week?
Thanks so much for reading! We'll see you back here tomorrow.
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
For more info our other premium services, please go here... www.tsptalk.com/premiums.html
Daily Market Commentary Archives
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.
