After a banking sector downgrade by Moody's, stocks opened the day sharply lower and closing down making it 5 losing days in the last 6. However, in an effort to keep us guessing, there was a steady rebound during the final five hours of the day, and the Dow closed down just 159-points, which was more than 300-points off its morning lows. So where do we go from here? Yields fell so bonds and the F-fund rallied.
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In yesterday's commentary, while analyzing the S-fund's chart DWCPF, I said this:
"KRE, the Regional Bank ETF, is up against long term resistance right now after a pretty good rally recently. Whether it can break above that resistance could make or break the S-fund in the short-term."
One day and a downgrade of the banking sector later, the Regional Banks got slammed, failing at the 200-day EMA again after several failed attempts to break above it. However, that just half the story because KRE, which was down 4.5% in early trading, ended the day down just 1.3%, so it posted a positive reversal day like many of the indices. The S-fund was down about 0.9%, fighting its way back from an early 2% morning loss.
The S&P 500 touched a rising support line just above the 50-day EMA before it turned around. It was down 19-points, or 0.42%, but it was down more than 50-points at its lows before it rebounded. As of now, the channel is still intact.
The Yield on the 10-year Treasury gapped down sharply and fell below 4% for the first time in August, but it also closed off its lows and that put it back above 4%. The yield found support at a rising support line, filled in an open gap, and then reversed course.
The dollar gapped up, pushed above the longer-term resistance line, then flipped over and closed at its lows of the day. It is back above the rising support line that broke down a few days ago. This is a very interesting juncture for the dollar, and of course our I-fund will trigger off of this.
Bottom line, yesterday's action was concerning, but it ended with some encouragement for the bulls as dip buyers stepped up despite another wave of bad news from the ratings agencies.
The July CPI Report comes out on Thursday of this week and with fewer catalysts on the docket, it will become a focus this week.
The S&P 500 (C-fund) battled back from a deep morning loss to end the day down a more manageable 0.42%. There was an open gap near 4450 that did not get filled, but so far the top of that gap held. That also happened to be where the old cup and handle formation broke out. Filling the gap and possibly testing the 50-day EMA wouldn't be a surprise, but it would disappoint the bulls after yesterday's reversal attempt. For the bears, another move up to the recent highs would be the disappointment after a couple of serious economic downgrades and being in the seasonally challenged month of August..
DWCPF (S-fund) had broken down from a couple of support areas. Yesterday's reversal didn't push it back into the red rising trading channel, but it did get back into that falling wedge formation (blue.) Volatility will have to calm down if this wants to get back in a more bullish situation - which would be back above its 20-day EMA (green) and back above the blue wedge.
EFA (I-fund) was battling the downgrade in the US banks, as well as the dollar's early strength. The dollar did close higher, but off the highs and back below the major resistance line that we have noted above in top section. It's a long way down if this wants to test the bottom of the wide red trading channel, but there's also room above just to fill in the gap by 73.50.
BND (Bonds / F-fund) rallied on the pullback in yields. This remains in an unfavorable looking chart, but closing above the orange 200-day moving average is a start. There's open gaps above and below so maybe it stays choppy for a while.
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.
Thanks so much 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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In yesterday's commentary, while analyzing the S-fund's chart DWCPF, I said this:
"KRE, the Regional Bank ETF, is up against long term resistance right now after a pretty good rally recently. Whether it can break above that resistance could make or break the S-fund in the short-term."
One day and a downgrade of the banking sector later, the Regional Banks got slammed, failing at the 200-day EMA again after several failed attempts to break above it. However, that just half the story because KRE, which was down 4.5% in early trading, ended the day down just 1.3%, so it posted a positive reversal day like many of the indices. The S-fund was down about 0.9%, fighting its way back from an early 2% morning loss.
The S&P 500 touched a rising support line just above the 50-day EMA before it turned around. It was down 19-points, or 0.42%, but it was down more than 50-points at its lows before it rebounded. As of now, the channel is still intact.
The Yield on the 10-year Treasury gapped down sharply and fell below 4% for the first time in August, but it also closed off its lows and that put it back above 4%. The yield found support at a rising support line, filled in an open gap, and then reversed course.
The dollar gapped up, pushed above the longer-term resistance line, then flipped over and closed at its lows of the day. It is back above the rising support line that broke down a few days ago. This is a very interesting juncture for the dollar, and of course our I-fund will trigger off of this.
Bottom line, yesterday's action was concerning, but it ended with some encouragement for the bulls as dip buyers stepped up despite another wave of bad news from the ratings agencies.
The July CPI Report comes out on Thursday of this week and with fewer catalysts on the docket, it will become a focus this week.
The S&P 500 (C-fund) battled back from a deep morning loss to end the day down a more manageable 0.42%. There was an open gap near 4450 that did not get filled, but so far the top of that gap held. That also happened to be where the old cup and handle formation broke out. Filling the gap and possibly testing the 50-day EMA wouldn't be a surprise, but it would disappoint the bulls after yesterday's reversal attempt. For the bears, another move up to the recent highs would be the disappointment after a couple of serious economic downgrades and being in the seasonally challenged month of August..
DWCPF (S-fund) had broken down from a couple of support areas. Yesterday's reversal didn't push it back into the red rising trading channel, but it did get back into that falling wedge formation (blue.) Volatility will have to calm down if this wants to get back in a more bullish situation - which would be back above its 20-day EMA (green) and back above the blue wedge.
EFA (I-fund) was battling the downgrade in the US banks, as well as the dollar's early strength. The dollar did close higher, but off the highs and back below the major resistance line that we have noted above in top section. It's a long way down if this wants to test the bottom of the wide red trading channel, but there's also room above just to fill in the gap by 73.50.
BND (Bonds / F-fund) rallied on the pullback in yields. This remains in an unfavorable looking chart, but closing above the orange 200-day moving average is a start. There's open gaps above and below so maybe it stays choppy for a while.
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.
Thanks so much 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.
