Yet another mixed day for stocks as the Dow added an impressive 163-points, but the S&P 500 was just slightly better than flat, the Nasdaq was down sharply, and small caps and the S-fund were held in check despite a small gain in the Russell 2000. Bonds were down again, the dollar was up but closed off its highs, and oil rallied.
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The market seems to be talking about the $1 trillion infrastructure bill which passed through the Senate, but may have some trouble in the House. The talk didn't really translate into any consistency with the indices quite mixed, but the Transportation Index, which has been struggling lately, was up nearly 2% yesterday, which may have been related.
Internally it was a flip flop of Monday's action with the NYSE leading on the bullish side, and the Nasdaq lagging, so it was sort of a quiet Turnaround Tuesday.
The 10-year Treasury yield rallied for a 5th straight day off the double bottom low. It broke through the 200-day EMA, and that purple line is a 44 day average. Why 44? Because it seems meaningful to traders over the last few months. Once again we're at a point where yields moving higher may be a good news / bad news development. Yields tend to move up when the bond market believes the economy is on the road to growing.
However, a growing economy means the Fed could back off from their easy monetary policies. Back in February and March the yield on the 10-year shot straight up and the S&P experienced three separate pullbacks, although relative modest ones.
The dollar was up slightly but gave back some larger earlier gains as it reached toward the July highs before pulling back some. We saw oil, copper, and gold move up on the day, but Lumber got tagged again and moved to a new 2021 low at 505.
We get the CPI report (Consumer Price Index) today and the PPI (Producer Price Index) on Thursday. Both can be market movers, especially in this environment where bond yields and inflationary data are being so closely analyzed.
The S&P 500 (C-fund) is drifting higher as we have seen time after time, since the COVID crash bottom last year. Yes, we do get the occasional dip that has been bought every time, and we don't know when that will end - but it will some day. But so far the ones guessing when that will be have been wrong. We have some internal issues that could be warnings of a different outcome next time, but we've seen a lot of those warnings come and go as they've become false flags. But as we get more complacent it probably means something more sinister could be around the corner. But which corner might that be?
The DWCPF (S-fund) was down slightly as it continues to struggle with that overhead resistance line. It's tough to tell if the bulls are being more determined to not let it pullback sharply like it has repeatedly this year, or if the bears have gotten scared and they just don't have it in them to push back this time. Either way it's a pretty good battle going on in that 2250 area.
The EFA (EAFE Index / I-fund) was up despite some strength in the dollar so that's a bullish sign. I haven't really paid much attention to the Delta variant in Europe recently, but I do see that Japan's Nikkei has been up for several days in a row now, so that's helped here.
The Dow Transportation Index moved higher yesterday with some strength in the railroad stocks. It tried to get back above that 100-day average, but it closed just below it again. The one year chart below shows how significant that 100-day average has been for this index.
The BND (bonds / F-fund) fell again as yields continue to move higher. The 50-day EMA is getting tested now, and while that average hasn't been too meaningful on this chart, a breakdown could mean a test of the 200-day average, and / or the lower end of the rising trading channel is coming.
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 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 market seems to be talking about the $1 trillion infrastructure bill which passed through the Senate, but may have some trouble in the House. The talk didn't really translate into any consistency with the indices quite mixed, but the Transportation Index, which has been struggling lately, was up nearly 2% yesterday, which may have been related.
Internally it was a flip flop of Monday's action with the NYSE leading on the bullish side, and the Nasdaq lagging, so it was sort of a quiet Turnaround Tuesday.
The 10-year Treasury yield rallied for a 5th straight day off the double bottom low. It broke through the 200-day EMA, and that purple line is a 44 day average. Why 44? Because it seems meaningful to traders over the last few months. Once again we're at a point where yields moving higher may be a good news / bad news development. Yields tend to move up when the bond market believes the economy is on the road to growing.
However, a growing economy means the Fed could back off from their easy monetary policies. Back in February and March the yield on the 10-year shot straight up and the S&P experienced three separate pullbacks, although relative modest ones.
The dollar was up slightly but gave back some larger earlier gains as it reached toward the July highs before pulling back some. We saw oil, copper, and gold move up on the day, but Lumber got tagged again and moved to a new 2021 low at 505.
We get the CPI report (Consumer Price Index) today and the PPI (Producer Price Index) on Thursday. Both can be market movers, especially in this environment where bond yields and inflationary data are being so closely analyzed.
The S&P 500 (C-fund) is drifting higher as we have seen time after time, since the COVID crash bottom last year. Yes, we do get the occasional dip that has been bought every time, and we don't know when that will end - but it will some day. But so far the ones guessing when that will be have been wrong. We have some internal issues that could be warnings of a different outcome next time, but we've seen a lot of those warnings come and go as they've become false flags. But as we get more complacent it probably means something more sinister could be around the corner. But which corner might that be?
The DWCPF (S-fund) was down slightly as it continues to struggle with that overhead resistance line. It's tough to tell if the bulls are being more determined to not let it pullback sharply like it has repeatedly this year, or if the bears have gotten scared and they just don't have it in them to push back this time. Either way it's a pretty good battle going on in that 2250 area.
The EFA (EAFE Index / I-fund) was up despite some strength in the dollar so that's a bullish sign. I haven't really paid much attention to the Delta variant in Europe recently, but I do see that Japan's Nikkei has been up for several days in a row now, so that's helped here.
The Dow Transportation Index moved higher yesterday with some strength in the railroad stocks. It tried to get back above that 100-day average, but it closed just below it again. The one year chart below shows how significant that 100-day average has been for this index.
The BND (bonds / F-fund) fell again as yields continue to move higher. The 50-day EMA is getting tested now, and while that average hasn't been too meaningful on this chart, a breakdown could mean a test of the 200-day average, and / or the lower end of the rising trading channel is coming.
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 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.
