We saw a little volatility on Thursday but the bulls were still around late waiting for an opportunity. We did get a sea of mostly red in the indices yesterday, and the S&P 500 turned negative for the week, but even on a day where the bears took control, the dip buyers were buying late into the close. Bond yields slipped lower (bonds and the F-fund up) on slightly higher jobless claims and existing home sales coming in light.
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The price action has been favoring the bulls despite the bears having the better story to tell. The problem for the bears is that stocks were down sharply last year as the market was busy pricing in all of the negative headlines regarding higher interest rates and a possible recession. Now, as days, weeks, and months go by without much evidence of a economic decline, the bears' argument has been running out of steam.
It may take an action from the Fed or another financial headline to give the bears what they want or expect, but that is speculating as most people on Wall Street are already anticipating another 0.50% rate hike in May. The question on investors' minds as this market continues to hold up in the face of the rate hikes, is what the Fed will say about the next possible move after the May meeting - up, down, or a pause.
As much as the bulls want to hear talk about a pause or an interest rate cut, history suggests that when they do start cutting, the inverted yield curve will reverse and steepen again, but in the past that was about the time that we saw the stock market really exhale.
The Yield on the 10-year Treasury was sharply lower yesterday on some slightly weaker economic data in the jobless claims and existing home sales. We saw a double top pullback and a close back below the 50-day EMA.
The Dow Transportation Index tried to breakout above a couple of resistance lines, but afternoon weakness pushed it back below them. Shipping company CSX was up after hours after posted earning after the bell yesterday. That may help push the Transports above that resistance.
The price of oil has pulled back sharply off its recent peak, but we've seen that large open gap looming near $76. It held at the 50-day EMA and the rising support line, but will that open gap continue to lure it in to get filled? If the gap gets filled it would have to fall through that support line.
Next week may be more interesting as companies like Microsoft, Amazon, Google, and Facebook (Meta) report earnings.
The S&P 500 (C-fund) fell below that "F" flag in red, but found support at the bottom of that rising blue trading channel. There's not a whole lot of support below that until 4075 and then the 50-day EMA near 4043. And yes, that dreaded open gap near 3975 that I continue to be worried about. At this point I think the question is whether this hits the old highs before pulling back, or does it pull back first and perhaps get a boost from earnings next week? With volatility getting lower we may not see much happen until those reports come out.
DWCPF (S-fund) was down and the losses in KRE - the regional bank index - were part of the problem again. Technically it slipped into a more negative situation as it closed back below the 50-day EMA and a couple of trend lines that it had taken out on Wednesday. This looks vulnerable, but I have been saying that for weeks so patience will be needed regardless of what you want to happen here.
The EFA (I-fund) has moved sideways showing some relative strength versus US stock indies once again. It has to be tired after the rocket move off the March lows, and those open gaps aren't going away unless or until they get filled.
BND (Bonds / F-fund) gapped up filled opening another gap (blue) so perhaps the 50 and 200-day EMAs are going to hold after the recent pullback? 73.20 looks like an area that would need to hold if yesterday's bounce isn't for real.
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 so much 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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[TD="width: 338, align: center"] Daily TSP Funds Return
[TR]
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The price action has been favoring the bulls despite the bears having the better story to tell. The problem for the bears is that stocks were down sharply last year as the market was busy pricing in all of the negative headlines regarding higher interest rates and a possible recession. Now, as days, weeks, and months go by without much evidence of a economic decline, the bears' argument has been running out of steam.
It may take an action from the Fed or another financial headline to give the bears what they want or expect, but that is speculating as most people on Wall Street are already anticipating another 0.50% rate hike in May. The question on investors' minds as this market continues to hold up in the face of the rate hikes, is what the Fed will say about the next possible move after the May meeting - up, down, or a pause.
As much as the bulls want to hear talk about a pause or an interest rate cut, history suggests that when they do start cutting, the inverted yield curve will reverse and steepen again, but in the past that was about the time that we saw the stock market really exhale.
The Yield on the 10-year Treasury was sharply lower yesterday on some slightly weaker economic data in the jobless claims and existing home sales. We saw a double top pullback and a close back below the 50-day EMA.
The Dow Transportation Index tried to breakout above a couple of resistance lines, but afternoon weakness pushed it back below them. Shipping company CSX was up after hours after posted earning after the bell yesterday. That may help push the Transports above that resistance.
The price of oil has pulled back sharply off its recent peak, but we've seen that large open gap looming near $76. It held at the 50-day EMA and the rising support line, but will that open gap continue to lure it in to get filled? If the gap gets filled it would have to fall through that support line.
Next week may be more interesting as companies like Microsoft, Amazon, Google, and Facebook (Meta) report earnings.
The S&P 500 (C-fund) fell below that "F" flag in red, but found support at the bottom of that rising blue trading channel. There's not a whole lot of support below that until 4075 and then the 50-day EMA near 4043. And yes, that dreaded open gap near 3975 that I continue to be worried about. At this point I think the question is whether this hits the old highs before pulling back, or does it pull back first and perhaps get a boost from earnings next week? With volatility getting lower we may not see much happen until those reports come out.
DWCPF (S-fund) was down and the losses in KRE - the regional bank index - were part of the problem again. Technically it slipped into a more negative situation as it closed back below the 50-day EMA and a couple of trend lines that it had taken out on Wednesday. This looks vulnerable, but I have been saying that for weeks so patience will be needed regardless of what you want to happen here.
The EFA (I-fund) has moved sideways showing some relative strength versus US stock indies once again. It has to be tired after the rocket move off the March lows, and those open gaps aren't going away unless or until they get filled.
BND (Bonds / F-fund) gapped up filled opening another gap (blue) so perhaps the 50 and 200-day EMAs are going to hold after the recent pullback? 73.20 looks like an area that would need to hold if yesterday's bounce isn't for real.
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 so much 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.
